Using Key Business Indicators (KBI’s) to Revitalize Your Business

Whether your company is big or small, there are certain aspects that are key to your short and long-term success. What are these important parameters? Which ones should I measure? Which ones are irrelevant? Which ones will help me succeed?


Most businesses, particularly those that are large or growing, can be very complex. If you try to track everything you could spend all your time tracking and plotting data rather than doing those things that drive your business and make it successful. Key Business Indicators (KBI’s), or Key Performance Management Indicators (PMI’s), are not just a series of financial or business measurements, but a set of key criteria, which, if the work necessary to improve the indicator is done well, will result in your business being a true success.

Financial measures are not enough

Of course you track sales, expenses and profits, cash, capital expenditures, and margins. These are all important measures, but what is it that drives your business, what is it that differentiates you from the competition and makes you stand out, what is it that drives people to buy your product or services, and what do you need to spend more time on to make sure they continue to buy from you or that you continue to add new clients or expand what they purchase?

What are KBI’s really about?

For me, key business indicators or PMI’s are more than just measures, they are about boiling down your business to the critical aspects that make you successful, putting in a carefully thought through plan to develop your business to be even more successful and then focusing on only that which matters. KBI’s are about focus.

What is important?

If you focus on what really matters to grow your business, to make it a success, you will succeed. I always find it useful to revisit your business strategy at this point. Do the assumptions still make sense? Does the strategy still make sense?  Does the business plan and marketing plan still make sense? Are you doing the right things? Are you spending the time on the right aspects of your business? Where do you need to spend your time to really pull it off?

Once you have reviewed your plan and defined the most important things you should be doing because they will make you successful, then you can define your KBI’s.

What makes for a great KBI?

A great KBI must relate directly to the important activity of your business that will help you be successful, it must be measurable, it must be controllable, it must be sensitive to the changes you can bring to bear.

KBI’s should follow the SMART criteria:

  • The measure has a Specific purpose to the business
  • It is Measurable
  • It has to be Achievable
  • It has be Relevant to the organization
  • And it must be Time phased, which means the value or outcome must occur in a specific time frame.

KBI’s that work

  • In one of my previous companies acquiring new customers drove the business, and so the KBI was new customer acquisition compared to a forecasted value. We didn’t have to worry about the revenue, if we signed a new customer, the revenue was guaranteed and the profitability was pretty much set as long as we didn’t do anything crazy.
  • Perhaps your business is driven by repeat business of satisfied customers, so you need to be doing things to make sure people are coming back. The KBI could be tracking the frequency of repeat business, for example, the $ per repeat customer over time, or the level of satisfaction of repeat customers, frequency of repeat business per week, etc
  • In another scenario, where the more a customer buys the more a business profits, think restaurants, then the KBI could be $ spent per customer.

The essence of a good KBI is that it makes you and others focus on what is important to the business without being too distracted by everything else that is going on around you. In larger companies, it is often the practice for each department to have their own KBI’s to ensure they are focused on the appropriate activities.

MP Consulting writes a weekly blog on Social Media, Marketing, Leadership, Business Strategy and other Key Business Topics. Hopefully this has given you something to think about.  My goal is to make your life easier and to ensure you are as productive as possible. I hope you enjoyed this and that you will send me your comments, subscribe and link to my blog (add your email address in the subscription window and accept the invitation in your email), and if you need help, or need to ask me a question.

To obtain a copy of Mark Philip’s book, The Strategic Plan Guide, go to: Amazon paperback and kindle: or go to CreateSpace Paperback: and use the CreateSpace Discount Code: QYFGMH77 (15% discount code).

To obtain a copy of Mark Philip’s book, The Business Plan Guide, go to : Amazon paperback and kindle: or go to CreateSpace Paperback: and use the CreateSpace Discount Code: EJD5HD2M (15% discount code).

Free Guides are also available from my blog site on a number of business subjects including: Strategic Planning, Business Plans, Marketing Plans, Social Media Planning, Public Relations Planning, Time Management, Negotiating Strategies, Effective Business Meetings, Due Diligence, and many others.

MP Consulting Services specializes in the areas of strategic planning, leadership, marketing and social media. Mark Philip, principal at MPCS, has over 20 years experience in managing businesses, both small and large, has orchestrated multiple turnarounds, built product pipelines, launched new products, sold companies and created significant shareholder value. Let me know how I can help you with your business challenge.

For More Information: visit my LinkedIn account.

Copyright © 2012 Mark Philip

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