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Stage 3: Startup Metrics And KPI's

Develop business success measures and key performance indicators (KPI's).
Once you launch, you'll be so caught up in running your business that you'll find it hard to think about measuring business success.

Overview

Purpose

Define key business success measures and KPI's.

Objectives​

  • Identify measures of business success, or failure.

  • Test your measures and key performance indicators (KPI's) with others.

  • Review your measures and KPI's, then either:

    • Continue as they are.

    • Refine them.

    • Find another idea.

  • Set acceptable tolerances for KPI's.

  • Implement processes to measure business performance.

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Result

Business metrics that enable you to demonstrate success, or trigger intervention if things aren't going to plan, after you launch your startup business.

Define Business Metrics

Use your business plan to identify critical measures of business success. Look particularly at the Key Metrics, Costs, and Revenue sections of your Lean Canvas. 

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Choose metrics and KPI's that will demonstrate success or problems with your business vision, avoiding detailed, low-level metrics. Use the SMART Goals approach for your metrics (see Weblinks).

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Targets could include:

  • Customers addressed/acquired/retained

  • Revenue/Cost totals

  • Marketing engagement

  • Others, specific to your business

Click button and select Category

"Goals"

Test Business Metrics

Review your metrics and KPI's. Ask others, such as staff, business partners or supporters to review them too.

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Encourage honest feedback to discover the strengths and weaknesses in your metrics and KPI's. Ask questions:

  • Are these metrics important to my business?

  • How will they vary as my business develops?

  • Are they specific and linked to a timeframe?

  • Are they realistic and achievable?

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Make sure you record all comments.

Click button and select Category

"Goals"

Review And Adjust Metrics

From the feedback you've received, is there anything you can do to improve your business metrics or KPI's?

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Make changes now to refine your business metrics.

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If changes are major, go back and test your metrics and KPI's again.

Define Acceptable Metrics Tolerances

Your business is unlikely to perform as you predict it will. Performance probably won't align with your estimates. Define the point at which this misalignment goes beyond acceptable variation and highlights a problem in your business.

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For each KPI, define upper and lower limits. These mark where you'll need to intervene or perhaps adjust your business vision or design because it's either unexpectedly successful, or performing poorly.

Define Tracking Methods

​For each measure, define the method you'll use to capture information and track against your stated KPI's and tolerances.

 

For example, you could be monitor business cashflow against forecasts on a monthly cycle. This monitoring process provides a perfect opportunity to track progress against financial performance indicators.

Are You Ready For The Next Step?

Make a conscious decision about your business metrics and KPI's. 

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If your metrics and targets haven't been well received by your reviewers, decide whether your business goals are realistic. 

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If you're not likely to be able to achieve your targets, you should ask yourself if your new business can survive with lower performance. ​

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​This is the last time that you'll be asked to decide to quit or commit to the next Framework stage. If you decide to proceed, the next stage is to Acquire Startup Funding needed to ready your business for launch.

Learn More:

See measurable startup success:

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