How to Use Performance Indicators

Measuring performance is a very important task in every business and those wishing to grow their company or business, constantly need to keep an eye on the things that matters to performance.

Performance indicators are quantifiable measures that businesses use to assess their performance. Performance means how the company is meeting its objectives that it set at the start of a financial year. If the company is faltering and has been facing trouble achieving its set goals in given time period, performance indicators show the officials a real picture.


  • 1

    Make sure indicators are measurable and realistic

    The first thing to do before you select performance indicators for your business is to make sure that all the indicators are measurable and goal-oriented. Remember that performance indicators are not targets or goals of your business, rather they indicate how the company is meeting those targets and monitor the progress during a given year.

  • 2

    Concentrate on profitability

    Profitability is the most important aspect of every business, so it should be monitored closely and actively. One of performance indicators should focus on how the company is keeping up with the projected profits in a given year and if there are some flaws and the company is facing difficult earning enough profits, this indicator should communicate well that what actually went wrong and what to do to fix the problem. Profitability is a complex aspect of your company as it involves cashflow i.e. how costs, sales and working capital are being treated and how the money is coming in and going out of business.

  • 3

    Make strategic goals

    Every company runs a business to make money and money cannot be made unless there is a strategic goal or goals. Define what goals you have to achieve and the deadline. Strategic goals usually focus on profitability in the long run, but in today’s competitive market, it has a much broader meaning and scope than ever before. Make strategies for marketing, sales, and production and try to assess performance each financial year or six months.

  • 4

    Assess sales activity

    Although sales activity is part of the whole profitability analysis, its importance in today’s business environment has led many to treat it as a separate element. Sales performance can be gauged through many methods and techniques. And if sales are better than expected and the response from the customers/clients is good enough, you can expand your scope to other areas and make operations even better.

Leave a Reply

Your email address will not be published. Required fields are marked *

− one = 0