Improve your franchise business using KPIs
Using KPIs to improve the performance of your franchise
Every franchise business should have a business plan and strategic goals. But it shouldn’t end there. Your business plan shouldn’t just sit on a shelf until you decide it might be time to update it. You need to implement it and keep track your progress.
The tools for this job are KPIs, or key performance indicators. They provide a way to measure the performance of your business in specific areas and evaluate your progress towards your goals.
KPIs can help you improve your franchise business’s performance by:
- focussing attention – if there are competing demands, the demands that get measured will win
- assisting with decision-making – it’s hard to argue with data, which makes prioritising easy
- driving behaviour – there’s no motivation if there’s no measurement
- making performance (or lack of) visible – there’s nowhere to hide when things are measured’
- telling a story – regular KPI reporting enable you to see the big picture.
Good KPIs link directly to your franchise business goals in your business plan. They are measurable targets that you can report on regularly – and they will tell you if you’re on track to meet your goals, and if not, why. For most franchise businesses, five to seven carefully selected KPIs will do the trick.
For example, if you have a goal to increase sales by 15%, you might choose two or three metrics to measure your progress in this area. Depending on the type of business and industry, this could be monthly online conversion rate, revenue per employee or average order value.
KPIs also need to be timely. Data needs to be up-to-date and timelines need to be clearly defined. In the example above, metrics could be measured monthly or even weekly depending on the size of your franchise business. This will enable you to see meaningful trends.
It’s a good idea to graph your KPIs to show the trends and colour code them to make them easy to understand – and make them visible to everyone.
- Red = lagging.
Action: urgent attention required.
- Yellow = just scraping by.
Action: start asking questions and keep a close eye on progress.
- Green = excelling.
Action: acknowledge and celebrate.
A combination of lagging and excelling KPIs will tell a clear story about your franchise business’s performance and empower you to make the right decisions to drive your business forward.
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