What Are the 5 Key Performance Indicators?

As you grow your business, it is likely that one metric is going to become paramount. Yep, we’re talking about KPIs or key performance indicators.

These handy metrics help you gain insight into the growth of your business and whether your strategies are working. But you may be wondering – what are the 5 key performance indicators?

If so, keep reading to learn more about what are KPIs!

Reliable Results

To make the most of your performance indicators, you will need to know how to measure KPIs. The good news is, that this is made easy with standard metrics that offer accurate and reliable results.

Here are the five primary KPIs to watch if you’re learning how to measure KPIs.

What Are the 5 Key Performance Indicators

These five standard metrics were developed to drive business success. Start with these KPIs if you’re a beginner, and then you can start to introduce more indicators if needed.

1. Sales Growth Rate

Monitor your sales over time to identify which strategies are working and which aren’t. You can test this by looking at sales growth, revenue, etc.

Looking at this KPI will help you pivot strategies to increase positive sales.

2. Revenue Concentration

Where is the bulk of your revenue concentrated? Answering this question will help you allocate resources more accurately to the areas that drive revenue.

This could be to a specific client, project, or revenue stream. By watching this KPI, you’ll also be able to determine your return on investment on each particular strategy.

3. Net Profit Margin

Your bottom line speaks for itself. Watch your profit margin to keep your company’s financial health positive. The net profit margin KPI is thus of utmost importance.

You can do this by reviewing agile scrum project management. These can offer insight into which projects to feed into to increase profits.

4. Accounts Receivable Turnover

This KPI is also known as the debtor’s ratio. This concerns how quickly and accurately your customers pay their invoices within a billing cycle.

By knowing how many days it takes for you to receive your payments, you can make the process more efficient to better your cash flow.

5. Working Capital

Every business needs working capital for daily operations. Understanding your money and where it comes from will be critical in funding everyday functions like hiring and investing.

Working capital KPIs also help determine your assets and liabilities. This will come in very handy if you decide to pitch to investors down the line!

KPIs for the Win

KPIs are the perfect quantifiable metric every business needs to assess its progress. Great KPIs help you achieve your goals faster and with an end goal.

Are you excited to get started on your own KPIs? We hope this article on what are the 5 key performance indicators proves helpful!

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