New Year, New Budget
At last week’s 90 Day Planning Workshop, several of our clients and other business owners shared their frustrations about getting their teams on board to achieving the goals they set. We talked about this a little bit and I realized that they were missing a critical piece of Goal Setting, and that is the creation of Key Performance and Activity Indicators, which need to be identified and budgeted.
I recently wrote about the Budgeting Process to follow as part of the 4 Step Planning Process, and that budget process was for your accounting function. Now that we have Annual and Q1 Goals, we need to budget for Activity and Performance to help us achieve your goals. There are two types of Results Indicators we need to budget for, Key Activity Indicators (KAIs) and Key Performance Indicators (KPIs). Th
Key Activity Indicators measure the activities that are critical to the accomplishment of the goals, the results you want. KAIs are not results themselves, they are the tasks that you have decided will lead to results, and you need to establish a budget for each KAI. Some example KAIs are “number of calls made”, “number of networking events attended”, “number of face to face meetings scheduled and held”, and “number of social media posts”. As you can see, these activities are required of your sales and marketing team to identify and acquire prospects and leads for your company. Your KAIs should be the activities that you absolutely know are required to happen in some target volume to lead to the results you desire (your Goals).
Key Performance Indicators measure the results that are critical to the achievement of your goals. KPIs may be the goal itself or a sub-component of the goal, an intermediate result or outcome that leads to the bigger goals being hit. For example, your KPIs could include “number of quotes requested”, “dollar value of quotes requested”, “number of quotes/proposals won”, “dollar value of quotes won”.
At the end of the day, hitting our KPIs is what leads to achieving our goals, so these are tightly coupled to the goals. Budgeting and Tracking your KAIs helps you to understand your team’s activity levels and how they translate into end results, which allows you to keep track of individual performance and also which activities are working best – so we can do more of those. We also want ot know which activities are performing worst so we can figure out whether to eliminate the activity or improve our skills at performing the activity.
If you are ready for your Best Plan (and Year) Ever, contact us to schedule your FREE 90 Minute Business Diagnostic session with one of our coaches. We will take a long hard look at where you’ve been, where you want to go with your business and yourself as a leader, and chart a focused path for you to get there, including the identification of some KAIs and KPIs that we know will help you get there faster.
Author: Mark McNulty, Business Coach in Louisville, KY[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]