What KPI’s Should Your Small Business Be Tracking?

What KPI’s Should Your Small Business Be Tracking?

It’s one thing to run a small business, another is to run it successfully (and be profitable). If you run a small business you will face so many challenges. You will be busy trying to get the best employee you can afford, get customers, retain them, fine-tune your production line, source  materials, take care of customer support, market yourself, and more…At times, you may be too busy to ensure these efforts are being effective. So what should you focus on? Are you spending more than you are earning? What’s your customer timeline? All these are necessary to determine the rate of your business growth.

It is good for every business to measure its performance. It will also enable you to make informed business decisions, identify areas that need more attention, and improve your business growth. To measure all these, businesses should identify their own Key Performance Indicators (KPIs). These are the things that are the most important to your business success. They can be anything you consider important (revenue is the most obvious KPI), but there are also some pretty standard things that all businesses should be looking at to track business success.

So what are your KPIs? If you don’t have any right now, think about:

  • Nature of your business
  • The scale of your business
  • Your business goals

Then make a list of things you need to see in order for your business to be successful. Still not sure? Below is a list of some standard KPIs that you can use to get yourself tracking your business success.

Net Profit

Your net profit is the difference between your net revenue and your total expenses. It is usually calculated on an annual basis, but depending on your business, you should be looking at this monthly. You need to know if your profit is increasing or decreasing so you can make all kinds of business related decisions about staffing, marketing, and new products on a monthly basis.

Gross Margin Ratio

The gross margin ratio is the ratio of the profit on the sale of a product vs the cost of the product. You can calculate your gross margin ratio by subtracting the cost for the sale. You’d usually see this number as a percentage. Again we recommend tracking this monthly.

Quick Ratio

The quick ratio is the ratio of your expected income to your expected liability. You’re going to want to know if the money you are anticipating from your sales and/or services, will be enough to cover your business expenses (salary, rent, and other stuff). You can calculate the quick ratio by dividing your expected business income by your liabilities.

Customer Satisfaction

If your customers are not satisfied with your services then you will soon lose them and consequently run out of business. Satisfaction may be a difficult KPI to measure, and it can be a pain to do, but we promise it’s worth it. The best way to quantify it is by a survey and to allow your customers to express their satisfaction level on a given scale. A scale of  1 to 10 is pretty standard and easy to understand. If you do this periodically, you will be able to tell if customer satisfaction is dropping or increasing and you can use this information to make your business better.


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