The road to a successful cannabis grow can be a windy one, with lots of potential wrong turns. To get where you want to go you need a good map and proper navigational skills. Without knowing where you are, it is hard to know if you are headed in the right direction. Defining ‘Key’ metrics and accurately tracking them is critical to understand where you are, and where you are heading.
What are KPIs?
KPIs (Key Performance Indicators) are vital metrics specifically chosen to track the performance and health of a process. They are selected as the most important metrics because they provide meaningful insights into critical aspects of the health of your business. By monitoring these indicators you can objectively gauge progress towards your goals and identify areas where you are coming up short.
Selecting The Right Metrics
KPIs should be tied to specific goals for your cultivation. Selecting the ‘right’ metrics to track isn’t an easy task. In a commercial cannabis grow, there is an overwhelming amount of data collected. Environmental data, METRC data, Substrate data and Sales are all rich sources of information. But how do you know which metrics are the 'Key' metrics for your business ?
Define Success First
For every business, ‘success’ will look different depending on your goals and strategy. A boutique craft cultivation should focus on different metrics than a large-scale low-cost producer. A large-scale garden may focus on cost per gram and total yield as their KPIs. A craft garden may decide they want to optimize for revenue by growing higher value more unique strains. These two businesses should be tracking different metrics and gauging success differently. Identifying your niche helps clarify which KPIs are the right ones for your business.
SMART KPIs
Goals and KPIs should be SMART (Specific, Measurable, Attainable, Relevant, and Timebound)
Specific – Vague goals lead to vague results. Instead of simply aiming to “Increase yield/sqft”, set a more specific target. “Increase yield/sqft of sellable flower by 10% over the next 2 harvests” is more specific, with an objective way to measure if you have met your targets or not
Measurable – “Improve plant health” isn’t a measurable goal. If the goal of improved plant health is to increase yield or quality, pick a metric that reflects that. “Increase average yield per plant from X to Y” is a concrete goal, and Average Yield/Plant is an easy metric to track.
Attainable – Be realistic. If pest management is a challenge, don’t aim for “eradicating pests” right away. “Reducing pest pressures by 15% over each cycle” is more attainable and will more likely lead to the goal of eradication by breaking the process down into smaller steps.
Relevant – Goals and metrics should be relevant to your business and what you are trying to achieve. For example “Total Yield/Sqft” isn’t a relevant metric if it comes at the expense of quality and revenue. “Revenue Per/Sqft per Harvest” is a more relevant metric to your performance.
Timebound – Its important to put a time frame on each goal and the metrics tracked. This makes them objective and easy to gauge if you hit your targets or not. Instead of “We want to increase revenue by 10%” add a timeframe and now you have more clarity. “We want to increase revenue by 10% over the next year”
Leading vs Lagging Indicators
There are two types of metrics, metrics that predict future success (Leading) and those that explain past performance (Lagging). Leading indicators are the most valuable since they provide an insight into the process before it is completed and while you can still affect the outcome. In a cultivation, growth rates and plant health metrics are leading indicators of how a harvest will go. Metrics like average yield per plant and total revenue are lagging indicators because by the time you have this data it is too late to change anything. They useful for tracking performance of past actions and adjusting future strategies.
Cultivation KPI Examples
Below is a list of some examples of KPIs for a cultivation to track
Financial KPIs
Environmental KPIS
Data Management - the crux of KPI tracking
Data Management is the most important piece to maintaining any of the metrics mentioned. Strong systems need to be in place to collect, organize and store data for analysis. If the metrics are based on flawed or incomplete data, they are worthless. This is something that continually needs to be maintained and audited. It isn't enough to pick your KPIs and check in on them here and there, this is a continual process that needs attention just like your plants. If neglected things will get out of hand fast.
What goals and KPIs are you tracking in your grow? If you would like help defining clear goals and KPIs, organizing data and reporting on KPIs, please reach out and lets discuss further! If you found this article helpful please share it with someone who needs to read it!