Key Performance Indicators

6. Identifying Your Key Drivers

What are the key factors which enable your business to outperform its competitors?

The questions you need to ask yourself are: What drives the sales figures? What drives the costs? What drives the cashflow?

6.1 For most businesses, the key drivers include major cost-efficiency items.

• For example, two important drivers for a chicken processing company are inevitably going to be direct labour costs and yield (the weight of meat taken from each carcass). Both have a major impact on the gross margin.

6.2 Drivers often include 'soft' factors.

• For example, effective networking (to build new business relationships) has proved to be the key driver for many newer businesses.

6.3 The measurement of drivers is sometimes indirect.

• For example, if you have identified employee morale as a driver, you could monitor it by tracking voluntary overtime, absenteeism and sick days.

6.4 The drivers may change with time. The growth of your business, changes in your market or simply seasonal changes may cause this.