An entrepreneur’s day also has just 24 hours. You probably have enough work on your plate to fill the whole day but not all of these tasks have the same effectiveness for your company. Let’s first look at the two critical KPIs every company should focus on and how to drive them, and secondly, how to prioritize your tasks to give you clear guidance on where you should spend your time.
The two core KPIs every startup should focus on
If you look at all startups from a very high-level perspective, there are two core components that you should focus on: Building something users really love and earning money with that. With that in mind, you should focus on 2 main KPIs: revenue and active users.
You can look at active users from a daily, weekly or monthly perspective. Which metric you choose, and how you measure it, heavily depends on your business case. If you run an app for example, you probably want to measure how many people open your app at least once per day or full week. However, if you run a restaurant reservation platform, you probably want to measure how many people book at least once a month through your platform. Think about what characterizes an active user in your business, set the KPI and always measure it the same way to be able to compare the numbers and measure growth.
Revenue is simple to measure: How much revenue comes in on a monthly basis? How much were you able to grow revenue compared to the previous month? You could, of course, monitor many other KPIs too (and you probably should), but these two are the must-haves. Everything else is a nice addition, but not critical, and can often kill your focus.
How to drive your KPIs
Once you set up the two core KPIs and focus on them, you want to understand how you can influence and drive them. As with the core KPIs, you can basically structure your activities between two key areas: talking to users and building the product.
Talking to users can mean many things — not only interviewing potential clients and identifying their pain points, but also going out there and setting up a pipeline to make sales. This could also mean asking existing clients for referrals and feedback about the existing solution and doing some structured upselling. The important part here is that this task change as your company grows. While the focus is on getting feedback and identifying problems in the early days, it shifts to a replicable sales process after you’ve hit product market fit. The key here is to constantly be out there talking to users in order to close new deals and gain valuable insights.
On the other hand, what is especially important in driving the active users KPI, is building a great product. So, investing your time to create a solution that is 10x better than anything else out there is also time well invested. That’s also why it’s a smart idea to split your co-founder roles between business/sales (aka talking to users) and tech (aka building the product).
The entrepreneurial prioritization system
Now you know what you focus on and what activities actually influence your KPIs in a positive way. But you still haven’t figured out how to navigate through the endless tasks and possibilities where you could spend your time. The following system will be a great help.
First, start with a weekly goal. The goal you want to fully focus on throughout the whole week, where you want to show some real progress and move the needle. Once you set your goal for the week, you can start prioritizing and measuring all your tasks and activities at hand against this goal.
Start with the question: How does the task at hand impact my weekly goal? And choose between the three options “High”, “Medium” and “Low”. Rate all your tasks according to this question. Ideally, you should do this on a google or excel spreadsheet.
The second dimension you want to look at is the complexity of the task. Ask yourself: How complex is the task at hand? Also, choose a rating from “High”, “Medium” to “Low” for every single task that you already rated before.
Once you’re done rating the tasks, you’ll get a list that shows you the impact on your weekly goal as well as the complexity of the task. Now this will give you a clear focus because you want to start working on tasks with a high impact on your weekly goal and a low to medium complexity. These are the quick wins for you and your company.
Avoid tasks with a low impact on your goal but a high or medium complexity at all costs as they are a big waste of time. Also important: don’t tackle too many things at once, because then it’s really hard to get anything done. Tackle the first task (ideally high impact on goal and low in complexity) and get this done. Only move to the next task if the first one has been successfully completed.
While this system is still based on a very subjective opinion and rating, you will get much better at this the longer you implement it. This will not only lead to better prioritization of your tasks, but also to stronger and more successful results for your company. Give it a try and start by setting your goal for next week and rating your tasks.