By John C. Kelly

Most businesses do a good job of quantifying their financial goals. Too many, however, fall short when it comes to tracking those indirect measures which make it possible to meet their financial goals. Key Performance Indicators (KPIs) can help. KPIs are quantitative measures, not necessarily financial, that track progress toward business goals. To illustrate the process, consider a small retail shop, of which there are many in Annapolis. Some of the KPIs of interest might include the following:

  • Walk-bys by the hour of the day, day of the week, month of year, even by the outside temperature
  • Percent of walk-bys that come in
  • Percent of people who come in who make a purchase
  • Average store visit time (AVT)
  • Average purchase amount (APA)
  • Average number of items per sale (AIS)
  • Distribution of customers by age and sex
  • Distribution of customers by local versus tourist
  • Sales by product, by location of product in store, by sex and age of the customer, by sales clerk, by square foot, by time of day
  • Number of repeat customers
  • Number of product returns
  • Number of thefts
  • Inventory turnover

The idea is to look for those nuggets of information that you can use to boost revenue, cut costs, and put more money in your pocket. When you start measuring non-financial KPIs you won’t necessarily know which ones are critical to the success of your business, but over time trends and patterns will emerge which will guide you toward success. Many a revelation has come from chewing and digesting KPIs.

Entrepreneur reading financial report on dashboard