Setting KPIs in Small Business – Is it even possible and how do you do it?

Tuesday February 23, 2021

Chances are, when you set up your small business, “KPIs” were the last thing on your mind. For most people setting up their own business, the emphasis is on creating a sustainable enterprise that offers job satisfaction; world domination and selling shares on the stockmarket don’t tend to feature too heavily in the short term.

However, as your business grows and evolves, don’t be so quick to disregard the concept of KPIs. While they may sound like they belong in the domain of a multinational company, key performance indicators can, in fact, be a useful way of tracking your business’ performance and setting goals for the future. A KPI for small business can keep you on track and let you know whether your hard work is paying off.

KPIs will also help you determine where things aren’t working in your business, so you can correct and amend before it’s too late.

KPIs don’t need to be overly complex, either. Setting a few simple KPIs for the next six to 12 months can really set your business up for success. The trick is to start small, with a handful of straightforward KPIs to get you on the right track:


A simple and easy place to start with a KPI for small business is to track your net profit over time. Is your company getting more or less profitable year to year? Net profit equals your revenue minus expenses; you can track this week to week, month to month or year to year.


Efficiency ratios measure the ability of a business to use its assets and liabilities to generate sales. As KPIs, these ratios are typically compared to the results of other companies in the same industry. Within the efficiency ratio KPI you could consider:


The aim of the game is timing – you don’t want lots of cash leaving the business at the point in the month when minimal cash is due in. It’s important to strike a balance between money flowing in and out so that you’re not left out of pocket on the day your rent is due.


Do you know how much each new client costs? It’s worth considering sales and marketing expenses for each new customer, so you can establish whether you’re spending too much or too little on that expensive SEO strategy.


Keep an eye on your workforce. If you’re finding that you’re recruiting for new staff every few weeks or months, then consider why this might be. Your workforce might be disengaged or unmotivated. Disgruntled employees can have a dramatic impact on performance and profitability. Take the time to engage workforce and watch how staff retention rates improve.


Customer satisfaction is an important metric to keep track of because if your customers aren’t satisfied, they won’t keep coming back. Sudden drops or dips in customer satisfaction are warning signs that you need to shake up your customer service.


Market share is easily calculated by dividing your business’ sales by the industry as a whole’s sales. This KPI shows how well your business is competing with other businesses in your sector.

If you’d like a hand implementing KPIs for your small business, or focusing on one of the elements discussed here, reach out to the HR Dept.

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