Using KPIs to Set Realistic Business Growth Goals

Using KPIs to Set and Achieve Growth Goals

In our previous discussion, we broke down the essential Key Performance Indicators (KPIs) that provide a clear view of business performance. Defining metrics like visits, unit mix, and payer mix is the first step. The next, more crucial step is to use that data to steer your business toward sustainable growth. Simply tracking KPIs isn't enough; you must use them to set realistic goals, diagnose problems, and make strategic decisions.

This article will guide you on how to translate your KPI data into actionable growth strategies. We will cover the importance of benchmarking before setting goals, explain how to respond when your metrics signal trouble, and show how a deep understanding of your KPIs can illuminate the path to smart expansion.

Start with a Benchmark: Know Where You Stand

Before you can chart a course for where you want to go, you must know your current location. Attempting to set growth goals without a clear understanding of your past and present performance is like throwing darts in the dark. This is where benchmarking comes in. You need to establish a baseline.

First, gather historical data for your most important KPIs over a significant period—at least the last 12-24 months. This allows you to identify trends, seasonal patterns, and average performance levels. Knowing where you have been and where you are now provides the context needed to set ambitious yet achievable targets for the next quarter or year.

Without a benchmark, goals are just guesses. With one, they become informed objectives rooted in data. For instance, if your data shows a 5% average quarterly increase in new evaluations, setting a goal of 6% is a realistic stretch. Setting a goal of 25% without a clear strategy to achieve it is a setup for failure.

The Number One Driver: Focus on Evaluations

When you analyze your KPIs, you will quickly realize they are all interconnected. However, one metric stands above the rest as the primary driver of almost all others: evaluations. The initial evaluation is the gateway for new clients and the starting point for the entire service delivery chain. It is the engine of your business.

Think about it:

• More evaluations lead to more visits.

• More evaluations influence your visits per evaluation ratio.

• More evaluations ultimately impact your revenue and payer mix.

Because evaluations are the catalyst for nearly every other KPI, they should be your primary focus when setting growth goals. If you want to increase total visits by 10%, your first question shouldn't be "How do we get more visits?" It should be, "How do we generate the number of new evaluations required to support a 10% increase in visits?" This shifts your focus upstream to marketing, sales, and referral relationships—the activities that bring new clients through the door.

Responding to Stagnation or Decline

What happens when your KPI dashboard is flashing red? Stagnation or decline in key metrics is a clear signal that something is wrong within your operations. The data is telling you a story, and it's your job to listen and react. Ignoring these warnings is a direct path to greater problems.

If your KPIs indicate a slowdown, it’s time for a diagnostic deep dive. Here are the steps to take:

1. Isolate the Problem: Don't just look at top-line revenue. Is the issue a drop in new evaluations? A lower visits-per-evaluation ratio? A shift in your unit mix toward less profitable services? Pinpoint the specific KPI that is underperforming.

2. Investigate the "Why": Once you know what is wrong, explore why. A drop in evaluations might stem from a new competitor, a change in referrer behavior, or an ineffective marketing campaign. A decline in units per visit might mean your team needs more training on service delivery protocols.

3. Revisit Your Strategy: Armed with insights, you can take corrective action. This could involve reallocating your marketing budget, retraining staff on billing and scheduling, or adjusting your service offerings to better meet market demand.

4. Monitor and Adjust: After implementing changes, closely monitor your KPIs to see if your actions are having the desired effect. This creates a continuous feedback loop of performance, analysis, and improvement.

KPIs as a Litmus Test for Expansion

The ambition to grow often manifests as a desire to expand—opening a new office, launching a new service line, or entering a new market. However, expansion without a solid foundation is a recipe for disaster. Your KPIs provide the objective, data-driven gut check you need before making such a significant move.

If you have an underperforming clinic, why would you want to expand? You would simply create a second underperforming clinic and double your liability. True readiness for expansion is demonstrated by consistent, healthy KPIs across your existing operations.

Think of your business's health in the same way you think about your personal health. Metrics like weight, waist size, body fat percentage, resting heart rate, and blood pressure are direct, undeniable indicators of how healthy you are. There is no denying what these numbers tell you.

Your business's key performance indicators function in exactly the same way. They demonstrate the health of your practice objectively. When your core KPIs are all within an ideal, stable range, it signals that your operational model is sound, efficient, and replicable. Only then can you confidently consider expansion, knowing you are building on a strong, successful base.

Conclusion: Let Data Guide Your Decisions

Using KPIs effectively transforms them from passive numbers on a report into an active guidance system for your business. By first establishing a benchmark, you can set meaningful goals that push your team without setting them up for failure. By focusing on evaluations as the primary driver, you ensure your efforts are directed where they will have the most impact.

When performance dips, your KPIs are your first line of defense, helping you diagnose and fix problems before they escalate. And when you dream of growth, they provide the objective proof that your foundation is strong enough to build upon. Treat your KPIs like the vital signs of your business, and you will always have a clear, honest picture of your health and potential.