Basic KPIs for your business health(1)

The ability to analyze what is happening is essential in any business you can think of. This fact has always been the case, but from the time companies adapted to the digital paradigm shift, everything can be measured more accurately and efficiently. 

It is the golden age of web analytics for entrepreneurs and organizations of all sizes and conditions. 

Well, that is precisely what we are going to talk about in this series of posts that we start right now. Relax and take notes to start applying it to your eCommerce. 

Although the context of the introduction helps to understand, we should explain what exactly those acronyms are. 

KPIs are also known as Key Performance Indicators. They are those metrics that we define to control the evolution of the business. If they are blocked or do not reach the parameters that we mark as optimal, the health of the business is at risk. 

These indicators must fulfill two premises: be objectively doable and measurable within a specific period. "Selling more" is not a KPI; however "selling 10% in the next quarter" would be. 

It is not that you should be obsessed with KPIs: they are very significant, but neither to the point of conditioning yourself in everything you do. 

Review your expectations and, based on them, design your strategy. Do not exceed the performance that you can achieve objectively, because you are going to be stressed out. This, in the long run, will generate a certain dissatisfaction as an entrepreneur. 

It does not have to do with the burnout ratio or how burned out you are as an entrepreneur (I cannot think how that could be measured in terms of percentage).

Burn rate could be translated as a negative inflow, that is, the speed at which you burn money, especially when it is higher than its inflow. 

This KPI is very relevant in new companies and startups, especially in those that are still consolidating their level of income and have to use the contributions of the partners to keep working. When this ratio skyrockets, the company is shortening its life. 

Want some advice? Well, value what you need to invest in and the repayment period of the investments you make. Keep your structure as light as possible: you will live much calmer if you are rational with the money you spend at the beginning. 

ROI is undoubtedly one of the stars among the performance indicators. The acronym corresponds to Return On Investment. 

Everything that is done within a company must have a strategic objective, but also an economic return. Typical is to use a simple formula in which the income obtained from a particular action is subtracted from the cost it has involved, and it is divided by what is invested. 

It is a very simple calculation to perform. But, at the same time, it is very representative. A negative ROI is the most straightforward indicator of what actions need to be optimized or eventually stopped. 

When we carry out acquisition campaigns, which is especially intensive at certain times, we need to assess how effective they are as they represent an essential budget item. 

The formula is just as simple, since it is enough to divide the income generated through sales by the amount invested. .