The Cheat Code I Wish I Knew 20 Years Ago: KPIs

Look, I’ve been running businesses for 20 years, and I’ll be honest—I screwed up. Big time. I spent way too long without understanding the power of KPIs.

Author

Andrew Hardman
October 20, 2024

I thought I had it all figured out, just winging it based on "instinct" (spoiler: I didn’t). Things were fine, but I was leaving money and growth on the table—because I wasn’t tracking the right stuff.

Let me save you from making the same mistake. KPIs (Key Performance Indicators) aren’t some fancy MBA thing—they’re the cheat codes to scaling. Think of them like the dashboard in your car: without it, you’re just hoping you don’t run out of gas or blow a tire on the highway. Not a good way to drive—or grow a business.

Why You NEED KPIs (And Why You’re Probably Avoiding Them)

Here’s the thing: running a business without KPIs is like playing Mario Kart without looking at the screen. You might make it through a race or two on sheer luck, but you’re probably gonna end up off a cliff more often than not.

KPIs give you clarity, which is everything when making big decisions. Without them, you’re flying blind, guessing, and hoping for the best. And trust me, you can’t scale a business on guesses.

So, What Are KPIs, Really?

KPIs are like your business’s vital signs. They show if you’re healthy or on the verge of a heart attack. We’re talking Customer Acquisition Cost (CAC), Lifetime Value (LTV), churn rate, and profit margin.

The goal? Simple: don’t guess—know. KPIs give you the numbers that matter so you can stop thinking you’re crushing it and actually know if you are.

KPIs: Your Secret Weapon for Growth

Here’s why KPIs are your secret weapon:

1. KPIs Give You Laser Focus Stop wasting time on random projects that sound cool but don’t move the needle. KPIs force you to focus on what actually matters. When you track the right numbers, you’ll know exactly where to put your time, energy, and resources.

2. They Keep You Honest You know that gut feeling that everything’s going great? KPIs will tell you if that’s real or if you’re just kidding yourself. Think your latest marketing campaign is killing it? KPIs will show whether it’s driving sales or just burning cash.

3. They Align Your Team Scaling a business is hard when your team’s running in different directions. KPIs align your team, keeping everyone on the same page and working toward the same goal. No more “I thought we were focused on this” moments.

The 5 KPIs You Should Start Tracking Yesterday

Not all KPIs are created equal, but if you’re serious about scaling, these are the ones that will change your game:

  • Customer Acquisition Cost (CAC): How much does it cost to acquire a customer? If you don’t know, you’re throwing money out the window.

  • Lifetime Value (LTV): How much is each customer worth over their entire relationship? Higher LTV gives you more room to invest in growth.

  • Churn Rate: How many customers are leaving? If your churn is high, you’re pouring water into a bucket with a hole in it.

  • Conversion Rate: How many leads are turning into paying customers? Small improvements here can have a massive impact on your bottom line.

  • Net Profit Margin: Are you actually making money after expenses? If your margins suck, scaling will only multiply your problems.

Story Time: How Ignoring KPIs Almost Killed My Business

Quick story: I once knew a guy who thought he was killing it with his marketing. Let’s call him… John (definitely not me, by the way). John was getting tons of new customers, but his profits were tanking. So what did he do? He poured more money into ads, hoping more customers would solve the problem. Guess what? His profits dropped even further.

The issue? He wasn’t tracking Customer Acquisition Cost (CAC) or Lifetime Value (LTV). His CAC was $200, but his LTV was only $150. Every customer was a loss, and he didn’t even know it. Once he started tracking his KPIs, he flipped his strategy, optimized his funnel, and his profits shot up in six months. More importantly, he had clarity on what decisions to make to overcome the business constraints.

The moral of the story? Track your KPIs or suffer.

How I Use KPIs in Real-World Operations

Now that you get the theory, here’s how it looks in practice. In one of my businesses, everything runs around KPIs. Each team member or department is assigned one core metric. This is their primary focus.

For example, the head of sales focuses on one core metric: sales contracted per week. Other team members have metrics that feed into this, such as the number of new SQLs (Sales Qualified Leads) or meetings booked. But their main focus is hitting that weekly sales target.

Tracking these supporting metrics gives greater clarity. If sales contracted is down, we can look at SQLs to diagnose the problem. If SQLs are down, we might trace the issue back to MQLs (Marketing Qualified Leads) to see if prospect quality has dropped. KPIs help pinpoint exactly where the constraint is so we can fix it fast.

Red Light/Green Light System: Weekly KPI Reviews

Every Friday, all KPIs are collected and entered into our core sheet. This gives the leadership team a red light/green light view of the entire operation. What’s red light/green light? Simple: if a KPI is under target, it’s marked as a red light. This means we’re behind on our business plan.

On Monday, during our all-hands meeting, we quickly address any red lights. This system allows us to react immediately and resolve issues before they derail our growth.

Example of a Business KPI Dashboard for each department with a red light / green light breakdown

RACI vs KPI Target Report

How to Start Using KPIs Without Drowning in Data

Now, I get it—tracking KPIs sounds boring or overwhelming. But it doesn’t have to be. Here’s how you can make it simple:

1. Pick 3 Big Goals: What do you actually care about? More revenue? Lower churn? Decide on three goals that will move the needle for your business.

2. Choose 1-2 KPIs per Goal: Don’t overcomplicate it. If your goal is more revenue, track CAC and LTV. If it’s customer retention, focus on churn.

3. Set a 30-Day Review Cycle: Check your KPIs every month and adjust as needed. Scaling is a marathon, not a sprint. But with the right KPIs, you’ll know when to hit the gas.

Here’s My Gift: My KPI Tracking Sheet

I’ve been down the rabbit hole of KPIs, made a bunch of mistakes, and eventually built a system that works. And I’m giving it to you—for free.

Download the KPI sheet I use in one of my businesses, plug in your numbers, and start getting the clarity you need to scale faster. You’ll thank me in 30 days when you realize how much easier running your business can be with the right data.

Final Thought

KPIs are the cheat code. If you want to stop guessing, stop wasting time, and start growing faster, KPIs are your answer. Set them up, and watch how quickly things start to click. If you want results tomorrow, start tracking today.