MSP Measurements – the “Why” of KPI’s

PeterDrucker

“What gets measured gets improved.”
– Peter Drucker

One of the most valuable lessons I learned as a business owner was that even though I was running the day to day operations of my business and knew everything that was going on, I did not grow significantly until I started to actually measure what I was doing.  KPI’s are not just some fancy acronym reserved for large scale enterprise, they are Key Performance Indicators.  What is key to you is probably different from what is key to another MSP but there should also be similarities.  The most important things is to have them.

I boiled my KPI’s down to two categories, security and change.  Security based KPI’s made sure that I stayed within my operational safety zone and change based KPI’s allowed me to see if I was headed along the trajectory of where I wanted to be next.

Examples of simple financial based KPI’s can be:

  • Monthly minimum billings (cash flow)
  • Cash on hand (your bank balance)
  • Budget vs. Actual Expenses (cash flow)

Examples of simple change based KPI’s are:

  • New customers (sales)
  • Monthly billings % growth (sales)
  • Employee billable hours (efficiency)

Your KPI’s depend on your focus, what makes you feel safe and where you want to take your business.  You can get fancy with KPI’s but I suggest you don’t.  The first step is to determine 2 or 3 from both categories and concentrate on those for at least three months.  After three months you will undoubtedly have gleaned some additional insight into what KPI’s are right for you and your business.  Some KPI’s make obvious sense and some need to be tested, there is no harm in trying to measurements.  Some KPI’s should be looked at weekly and some monthly, this will vary from business to business.  Keeping an eye in them will help you to react faster to both downturns and opportunities, minimizing risk and maximizing return.

Even if you are a one-man shop, measurement is critical to obtaining the success and stability you want from your business.  It is very easy to say “I paid all the bills this month, we must be OK” and carry on.  That attitude allows for little to no growth will not help you prepare for market downturns.

Measurement is critical for reaching goals, both personal and professional.  If we don’t know where we are or where we are going how do we ever expect to get there.