In the startup world, we all love to learn what separates a thriving business from those that crash and burn. Our hypothesis is that if we can identify the key factors then our startup will get into the former category. At Geckoboard HQ, we think about this a lot, particularly when it comes to metrics. As part of this thought process, we recently commissioned a survey from Censuswide of more than 250 small and medium enterprises (SMEs) in the UK to understand how they use metrics to drive their business’s growth.
The tl;dr version of the results is that failure to identify and track key metrics is stunting SME business growth in the UK. (Note: there’s an infographic at the end of this post if you want the bite size version of the survey.) However, the issues also turn up some interesting trends in terms of the types of businesses and leaders that are building successful metrics-driven businesses.Failure to identify and track key metrics is stunting SME business growth in the UK.
UK SMEs are failing to identify key metrics
Our survey found that nearly half (49%) of UK SME owners have failed to identify any Key Performance Indicators (KPIs), otherwise known as the critical metrics which contribute to their business’s growth. This is a really scary stat because without knowing what will drive business growth, how can we expect UK SMEs to help drive economic growth?
When metrics are identified, they aren’t tracked regularly
Of those SMEs that did establish KPIs, they most commonly only looked at them on a monthly basis. Again, this presents a problem. In fast changing online industries, a lot can change in a month. If you’re only tracking key metrics on a monthly basis then you only know at the end of the month if you’re on track or not, which is too late if you’re setting monthly targets against key metrics.
Metrics aren’t reassessed
Nearly a third of UK SMEs (31%) also said that the key numbers they tracked were never reassessed. The metrics that matter to a business change based on a business’s strategy. For example, as you grow or adjust your business model the key metrics will also change. If businesses are changing but the metrics aren’t, then it can create a lot of misalignment and confusion for the team.
Fear of metrics is denting UK SME growth
This widespread avoidance of metrics is damaging growth prospects for UK SMEs with more than a third (39%) of them failing to meet all of their growth targets in 2015. However, our survey did highlight a smaller group of SMEs who are taking KPI measurement very seriously, with around a quarter (24%) saying they monitor their KPIs in real-time.
The research also found these businesses were reaping the rewards of careful tracking - three-quarters (74%) of businesses which monitor KPIs in real time hit all their growth targets, almost twice the average. It’s clear that when businesses track and consistently monitor KPIs, their performance improves compared to the average UK SME.Survey shows 74% of businesses that monitor KPIs in real time hit all their growth targets.
Employee performance is compromised when metrics are missing
The survey also found that perhaps the reason for businesses which monitor KPI’s in real-time performing better was due to the impact metrics had on employee performance. The survey found that a lack of available metrics and information is making it harder to motivate and focus team members, with half (50%) of British staff admitting that their overall performance was compromised when they were not made aware of key company information and metrics.
A younger generation of leaders are leading the metrics-driven campaign
Our research also found an interesting trend that the best examples of metrics-driven companies tended to be managed by a new guard of younger business owners (aged 20-44), who were twice as likely as older business owners to monitor KPI’s in real time.
Clearly, the younger generation have grown up in their careers with information being immediately available and data being at their fingertips to build a metrics driven approach. They’re now carrying this through as they progress to become business leaders and creating new metrics-driven cultures within their businesses.
Huge volumes of data doesn’t neglect the need for focused metrics
With so much available data in the modern world, entrepreneurs are increasingly forgetting to identify which metrics and data are most important to their business. Unfortunately, this means they’re struggling to focus their business on what matters for success.
If you’re not keeping a close eye on critical business metrics and sharing progress against those KPIs with your team, how can you expect your business to grow based on the evidence of this research? You could also be missing out on important signs for future growth or even worse, signs of trouble ahead.
There are so many things that are outside of an entrepreneur’s control, but establishing and tracking key company data is not one of them. Businesses which don’t learn to follow suit are limiting their chances of growth before they even get properly started.
If you want a quick overview of the data, take a look at the infographic below.