Key Performance Indicators (KPIs) are measurable benchmarks tracked month-to-month to determine if the business is meeting its goals. KPIs should always be tracked in accordance with the goals of the business. The best format to track KPIs is on a dashboard. In this KPI guide for solopreneurs, we take a closer look at major categories of KPIs, protocol TRAM protocol, and how to build two types of KPI dashboards for solopreneurs.
Regardless of your industry, there are some basic buckets or types of KPIs you want to track as a solopreneur.
- Sales Volume by Product or Product Type – Sales volumes are raw volume numbers that tell you how many sales you had for the period by product or product type.
- Conversion Rates – Conversion rate indicates how well your sales tactics are performing. This type of metric essentially tracks your sales volume divided by the number of visitors you have to your store or website.
- Financial Indicators – Financial indicators measure the profitability of your business. They include dollar-based metrics like total revenue, total expenses, net income, and profit margin.
In each of these categories there will be one or more metrics that you track. Each business is unique, so take some time to learn which metrics make the most sense for YOUR business.
As a solopreneur, its best to streamline what you track so its easy to update every month. That means choosing metrics that are easy for you to calculate, and in some cases, are already calculated for you in various dashboards or financial programs available to you. Putting them altogether on your KPI dashboard will give you one source to review your operational performance.
The TRAM PROTOCOL
The TRAM protocol is my own method for creating meaningful KPIs that drive profits. It four attributes that every KPI needs to have:
- Timely – Like all financial reports and relevant data, information must be delivered in a timely manner for it to useful. Old data won't give you an understanding of what's currently happening with your business.
- Relevant – KPIs should track goals and measures that materially impact the bottom line.
- Actionable – In order to use KPIs to drive profits, they must be actionable. If you can't affect the results, then why bother tracking it? Actionable KPIs are ones that enable businesses to improve results over time.
- Measurable – KPIs that provide accurate, quantifiable data are the most useful. If the data isn't accurate, it could mislead the business owner to make the wrong decision. Qualitative data collected using surveys or interviews can be useful, and is incorporated into KPI dashboards by bigger companies that have the means to survey regularly.
Check each of your KPIs and make sure they have the above attributes. If not, try to replace with KPIs that adhere to the TRAM protocol.
KPIs are most effective when tracked in a dashboard-style report. There are two formats that are meaningful to any solopreneur:
- Rolling 12 Months
- Monthly Actual vs Expected
Rolling 12 Month KPI Dashboard
In a rolling 12-month dashboard, the KPIs you determine are most important to your business are tracked monthly in a trended report, as shown above.
The first column shows the name of the KPI. KPIs can be grouped under categories like Web Traffic, P&L, Volumes, etc. The next 12 columns show the past consecutive 12 months, with the final column displaying the most recent month.
This report is designed to display a change in KPI trend. A metric could be trending up or down, or you could have month where the number is vastly different from other months. This will be an indicator that something different is happening in your business.
The “something” could be good or bad, depending on the direction. For instance, if you normally sell 50 units of your e-book each month, and the current month shows sales volume of 100, your sales just doubled. Find out what's happening and why, and use that information to further propel your sales.
On the other hand, the “something” could be negative. Your e-book sales drop to 10 from the average 50. You investigate and discover a broken link on your website.
As you can see, these trends can lead to the discovery of important information about what's driving your business. They can also provide a perfect confirmation that a new method or tactic is working.
Monthly Actual vs Expected
Expected KPIs compare your expected result with your actual result. Expected results are based on budgets, projections, or industry benchmarks. Industry benchmarks can be found by researching on Google, or by purchasing access to industry-specific publications that track this type of information.
Budgeted KPIs are ones based on your business's goals and trends, and are a great place to start for a newer business.
Projected KPIs are typically based on your current average plus an increased rate that you apply over time. For instance, let's say your traffic is currently at 5,000 visitors per month, and you project a 5% increase per month. Next's month's traffic projection benchmark would be 5,000 x 1.05% or 5,250.
Which one should you use? It depends on what makes sense for your business in its current stage. Keep in mind that each KPI should be based on the comparison that makes sense for that metric.
In the sample Actual vs Expected dashboard displayed above, I used a mix of benchmarks, depending on the metric.
As a solopreneur, you decide what gives you the most useful information to base your decisions on.
Want to adapt my sample spreadsheet for your own business?
Download my sample KPI dashboard for solopreneurs Excel Workbook here and use it to start your own dashboard.
Which key KPI metrics do you track for your business?