The Right (and Wrong) Ways to Track Your Company's Performance Know what to look for to know if you're progressing toward your goals.
Opinions expressed by Entrepreneur contributors are their own.
Key performance indicators, or KPIs, are the data used to chart a business on its way to success and profits. They're often used when revenue-starved startups need to identify ways to measure progress in the absence of cash flow. But there's a big risk: If you choose the wrong KPIs, you may drive your company to financial ruin.
So, how to pick? Identify your business goals and the activities that lead directly to achieving them. And keep in mind that more often than not, bad KPIs are the result of upper management and the board deciding what to track. You're better off listening to frontline employees; they'll give you more granular KPIs that truly show you how the company is doing. (See the chart below for some starter ideas.)
Continue reading this article — and all of our other premium content with Entrepreneur+
Join the internet’s leading entrepreneur community! With your subscription you’ll get:
- Access to all of our premium content and an ad-free experience
- A complimentary subscription to Entrepreneur Magazine
- Four free e-books a year and 20% off everything from our bookstore
- Exclusive events with business celebrities and successful entrepreneurs