If maximizing the value of your business is on your mind in 2025, you’re undoubtedly working to set and measure goals. Since you aren’t alone in this quest, we kicked off our first Exit Planning Peer Advisory Board meeting of the year with a focus on Key Performance Indicators (KPIs). The members of the group, which is made up of business owners, are focused on growing their business today with an eye on their long-term objectives.
These business owners came ready to embrace the task of identifying and prioritizing the Key Performance Indicators that apply to their individual businesses. Why? To ensure that they start out the year with the tools in place they need to monitor the pulse and performance of their business throughout the year, and beyond.
Whatever your business or its size, tracking progress against your goals can help you better understand where to focus your attention. Taking time to identify the critical levers that drive your business is the first step.
KPIs are measurable objectives that align with specific strategic goals for a defined period of time – an essential tool for driving business growth through the intentional review and analysis of your unique issues. They enable you to regularly monitor performance, make informed decisions, and improve results. By regularly analyzing KPIs, you have an accurate picture of how well your business is performing so you are better equipped to gauge which levers you may need to pull to stay or get back on track.
How to Begin
I recommend that you start with no more than five KPI categories, of which there are many across various components of your business. Common categories include:
- Finance
- Sales
- Marketing
- Operations
- Revenue/Profits
- Information technology
- Human resources/employee retention
- Customer service
From this list above, and considering your company’s overall strategy, what are the five categories you want to concentrate on this year?
Next, identify a few specific leading or lagging indicators for that category. For example, leading indicators for marketing may include specifics such as website traffic, social media engagement, open and click-through rates for emails and newsletters, and LinkedIn likes and comments. They provide the data that predict future performance and can often be adjusted quickly to influence future outcomes. Lagging indicators measure past performance. For marketing, it could be things like revenue growth, return on marketing investment, or customer retention rate. Set the KPIs, or desired goals, for each of your leading and lagging indicators. These are the metrics you will use to track your overall performance in each area.
Once your KPIs are in place, review and measure them weekly to stay informed and on track. If you find that some KPIs are not providing adequate information, consider choosing another KPI that more specifically provides the information you need. KPIs should also be revised along with any changes you make in your business, and as it grows. While choosing your KPIs can be difficult at first, taking an iterative approach by reviewing data and narrowing them down to those that are most critical to your company can help you continue on a growth or improvement trajectory.
Don’t Go It Alone
Another step to consider for getting and keeping your business on track is joining our Exit Planning Peer Advisory Board (PAB). Why, you may ask, is this group dubbed “Exit Planning”?
If you are building your business optimally, exit planning is a natural result. It requires strategic thinking with an eye on the future, which means planning and forecasting, then acting on that strategic plan. One of the most effective ways to grow your business is to develop a strategy focused on value optimization, which carries over into how the company is run. Maximizing the value of your business is also the focus of a good exit strategy and the key to accomplishing both long- and short-term goals. For many business owners, a value-based management approach can empower you to reach your growth goals today, alongside your future exit objectives.
When we gather as a group, our discussions are more often about present-day business practices for sustainable growth and success than that sometimes-elusive, eventual exit, yet the member business owners can be confident that the steps they take are also building the eventual future they envision.
Business owners who are part of the Peer Advisory Board gain valuable insights, sharing and solving problems alongside trusted peers. In the opposite months, each leader meets with me, Bob Zarlengo, CPA and Certified Exit Planner, to drill down and address issues that are unique to their business.
Is this something you could use to maximize the value of your business in 2025?
I would welcome the opportunity, from my CPA and strategic planning perspective, to help you define the strategic objectives you want to track and identify the KPIs that will most effectively do so, or to discuss how our PAB can help you build your business. Contact me for a complimentary consultation or to be a guest at our next meeting.
Bob Zarlengo is a certified exit strategist and CPA. More than four decades of experience in public accounting, expertise in financial reporting, income and estate planning, and tax compliance makes him a valued and trusted advisor to his clients.