Every KPI needs a floor, not just a target

Most KPI advice is about targets. Set them high but reachable, make them specific, give them a date. Fine. But a target only tells you where you want to end up. It says nothing about the moment you should stop what you are doing and look.

That job belongs to a second number, which most small companies never write down: the minimum.

Two numbers per measure

A target for gross margin might be 62%. The minimum might be 55%. Between the two you are behind plan but not in trouble. Below 55% something has broken: a supplier raised prices, a discount ran too long, a new product sells at a loss.

The difference matters because targets are usually set with ambition built in. Missing a stretch target by a few points is normal and not worth a meeting. Falling through the floor is worth a meeting the same week, not at the end of the quarter.

Where the floor comes from

Do not invent it. Look at the last twelve months of the measure and pick the worst month you would still call ordinary. Not the month the oven broke or the month you were closed for renovation. The weak but normal one. That is your floor. If you have no history yet, start with a guess and correct it after three months.

A few examples of how this looks in practice:

• Weekly revenue: target 14,000, minimum 11,500
• Repeat customers: target 45%, minimum 35%
• Days of cash in the bank: target 90, minimum 45
• Late deliveries: target under 3%, minimum (the worst you accept) 8%

The last one runs the other way, which is easy to get wrong in a spreadsheet. For measures where lower is better, the floor sits above the target.

Making it visible

A floor nobody looks at is a number in a drawer. It needs to show up as a colour. Green when you are at or near the target, amber between target and floor, red below the floor.

This is how ExploreKPI treats every measure: each KPI has a target and a minimum, and the status is calculated from both, including the reversed ones. All statuses roll up into one business health score from 0 to 100, so a single red measure pulls the score down and you can see which one did it.

What changes when you have floors

Meetings get shorter. Instead of walking through every number, you discuss the red ones and ask what happened. Amber gets a sentence. Green gets nothing.

People also argue less about targets, which is a relief. A target can stay ambitious when everyone knows the real alarm is set somewhere else.

If you want to try this on your own numbers, the free plan in ExploreKPI covers one business and ten KPIs, which is more than enough to start. Pick four measures, give each a target and a floor, and see how the first month looks.