In my early days of catering, my main key performance indicator was a happy customer. Today, it still is. However, as our firms grow, we all need to look to other ways to gauge how well we are doing. Happy customers without a profit won’t work for long; nor will growing sales with declining profits, or record revenues with no cash in the bank—or even a great website with no leads.
Bill Hansen Catering and Event Productions has very aggressive growth plans. When we stop growing in revenue, become stagnant, or worse yet, have decreasing sales from year to year, it’s basically a death sentence. Most of us want more sales and more profits, but a goal without a plan is poised to fail.
Hopefully, you have taken a 30,000-foot view of your firm and established a strategic plan, whether that plan was developed on a cocktail napkin or an Excel spreadsheet. With that, you need better ways to measure how you are doing in relation to that plan. This is where Key Performance Indicators (KPIs) come into play.
I have listened to seminars about KPIs, but never truly looked into how to implement more than just the monetary pieces, like revenue, gross margin, fixed costs, variable costs, cash flow, and net profit. Of course, there is nothing wrong with having these kinds of KPIs, but there is more needed if you plan on growing and becoming a leader in your market.
Because I needed some educations, I actually found a book called Key Performance Indicators for Dummies, by Bernard Marr. I learned some very valuable lessons.
Buy-in
As an owner or manager, you cannot dictate KPI use; you need to tread softly and explain to your team the “whys” of KPIs. I would suggest that after you explain KPIs to your team, ask them to develop KPIs for their own department. If they can run a department in your firm, they can definitely come up with some.
Indicators
KPIs are indicators, not goals for rewards and punishments. They can indicate performance but never provide the whole picture. At some juncture, you may want to consider bonuses for superior performance, but ay the onset you need to set the tone and get the measurements correct.
High-level KPIs
Before you drill down, you need to develop strategic, high level KPIs. These might include:
• Gross sales
• Profit maximization
• Robust cash position
• No debt
• Better brand awareness
• Very satisfied customers
• Maximization of online communications
• Improved internal communications
• Improved employee engagement
• Improved talent retention
• Improved service
• Improved quality
• Reduced errors in event execution
Of course, while this list could continue, you need to start the actual work. You need to develop measurements and indicators as to how your company is doing. A few words of caution: Only measure what matters. Figure out how the data will be collected. Determine who will be privy to the data. Most importantly, what are the associated costs for producing this data?
Next month, I will drill down in specific ways to measure every one of the strategic goals I mentioned above.
Get Fresh, August 2016
