13 Essential Small Business Metrics to Track Performance


This business metric shows whether you’re targeting the right market with the highest potential of attracting new customers. If the number of qualified leads is declining, it means you need to re-evaluate your marketing campaigns and sales strategy. The easiest way to do this is by raising the price of your products/services and selling more. Another method is to lower your sales and production costs while keeping up with the competition. Both of these tactics require thorough market research and long-term business strategy, and can’t be done overnight.

inventory turnover

While knowing your net profit is important, your net profit margin is a stronger indicator of your business’s financial health. Your net profit margin is the percentage of net profit generated by your company’s revenue. Revenue is the first KPI most businesses evaluate to gauge their success and market demand.

KPI Metrics Example

Quick ratio measures your company’s ability to pay off debts with the cash or near-cash assets you have right now. Knowing how quickly you can pay back your business debts, especially during times of economic uncertainty, is important for every small business owner. Use this ratio to monitor your liquid assets so you’re never caught off guard. This will improve your reputation, word of mouth marketing, and customer retention.

How do you measure small business growth?

How do you calculate a company's growth rate? A company's growth rate is calculated by dividing the difference between the current period value and the previous period value with the previous period value. It's expressed as a percentage.

But as your business grows, this is an important metric to keep track of. Different KPIs are going to be more important at different business stages. A relatively new company that is trying to stabilize cash flow might put a bigger emphasis on the days sales outstanding metric. For the reason that it tells them how quickly they can turn a receivable into cash.

Problem Solver’s Consultants Can Assist You In Selecting The Right KPIs For Your Small Business

For instance, if the desired action is to increase outreach, you may need to measure the number of calls made by each salesperson in a week. So the KPI would be the number of calls made per person per week. When trying to figure out which KPIs would be useful to your sales team, you can follow the sequence of steps we’ve listed below. In fact, choosing too many KPIs and monitoring them to measure sales performance will only make your analysis more complex, not yielding any useful insights.

cash flow

You can often automate these reports and they usually don’t need much manual data analysis. Depending on your industry and KPIs you may want to customize your standard reports. This can help you make sure that your reports clearly show the most useful information. If you track too many KPIs, you might become overwhelmed with the data and lose focus. Identify the person on your team who is managing this KPI, so they can be the go-to when addressing roadblocks that may affect performance. Because KPIs are so critical, it’s essential to set the right KPIs for your business.

How often should track my KPI targets?

Other important KPIs within revenue are revenue per employee and revenue growth rates. Combine this data with your leads figures from the preceding section to calculate customer churn, one of the most important sales KPIs for evaluating sales performance. Remember, you need to separately calculate sales revenue for all of these factors for each product/service you offer. In general 5% would be considered a low profit margin, 10% healthy, and 20% high, according to financial services company Brex. If you manage a startup, run a sole proprietorship, or own a new small business, you may not be too familiar with sales KPIs.

  • Unlike internal metrics, relative market share reveals how a company is performing relative to its competitors in the same space.
  • Average Customer Acquisition Cost Average customer acquisition cost uncovers how much a company spends, on average, to add new customers during a certain period of time.
  • Developing and Managing a Human Resources Strategy for Your Financial Startup When it comes to financial startups, one of the most important aspects to consider is the human…
  • There are a number of ways to increase customer engagement, such as sending out email newsletters, offering customer support, or providing training materials.
  • This sales KPI is easy to calculate and helps with real-time analysis of customer sentiment.

The total profits earned from the customer per year x Average number of years they remain a customer – Initial cost of customer acquisition. It is calculated based on the time, cost of tools, salaries, overhead, etc., spent on acquiring a single customer. It shows you whether the profits you have earned from the deal are more than what it had cost you.

Not only would that be difficult to do, but you’ll also lose sight of what’s really important. There are three things you should consider when choosing your 5 Kpis To Measure Small Business Growth. Sage Fixed Assets Track and manage your business assets at every stage. Sage 100 Contractor Accounting, project management, estimating, and service management.

6 steps to building a robust internal career development solution – Talent Management

6 steps to building a robust internal career development solution.

Posted: Mon, 27 Feb 2023 11:00:59 GMT [source]

You’ll want to measure new MRR (i.e. new customers), expansion MRR , and churn MRR . Sage Intacct Advanced financial management platform for professionals with a growing business. Once you add it all up, you’ll have a clear idea of your sales revenue.

A bad conversion rate is typically a sign of either a bad sales team, or poor quality leads. Evaluate the quality of your leads to see if you need to adjust your marketing strategy or improve your sales process. The sales growth rate is an essential sales and marketing metric that measures progress in total number of sales from month to month or year to year.