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description=If we were your fractional CFO, we’d set up a dashboard to monitor, at minimum, these six metrics—plus, a guide to metrics based on your industry.;

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Text of the page (random words):
ll provide an exact answer we first need to know more about your business different metrics matter for different business models and at different stages if you re an agency you won t care about tracking out of stock items the way an ecommerce store does and if you re a new consulting firm you won t worry about tracking how effective your sales compensation plan is until you are larger when that becomes critical at the end we share a precise list of metrics likely to be useful to your business these insights come from our bookkeeping and cfo services teams that help hundreds of small business owners like yourself build dashboards and make decisions what you ll learn how to not waste time metrics worth tracking how to use metrics to make decisions metrics by industry run a smarter business how to avoid wasting time on the wrong performance metrics the best metrics are always the ones that help you make decisions that s why you should only track numbers that you actually plan to use seriously do not track everything you read in this guide hopefully that s a relief the business owners we work with don t need to track hundreds of metrics just the ones that help them be successful that s because more isn t necessarily better 1 if you can t act on a metric it s just noise a dashboard full of red and green gauges might feel insightful but if you aren t using that information to do something differently it s a distraction like watching the stock market closely but not actually being invested in any stocks 2 if you track too much you ll feel paralyzed of these two dashboards pictured which is easier to follow sometimes less is more and having too many metrics can mean you make no decision at all try to limit yourself to 3 4 3 metrics cost you time and money tracking metrics isn t free they require you to upload or download spreadsheets or to maintain connections between quickbooks and other apps this means they take time money or both the more key metrics you have the greater the cost and the greater chance those numbers don t match and create a mess do track metrics but track ones that are valuable enough to spend your time on this is all to say do not obsess over things that don t help you make decisions narrow in on figuring out what does here are 6 key financial metrics every small business needs some metrics are universal every for profit business has income and expenses all must file taxes and many have employees and so must pay payroll that means there is a good chance you will want to track some of the six metrics in the following table reports data points 6 essential metrics profit and loss statement cash flow statement balance statement tax filings 1 revenue 2 cogs 3 opex 4 payroll 5 cash balance avg net outflow 6 ar 1 revenue growth shows if the business is actually scaling 2 gross margin core unit economics tells you if sales are profitable 3 opex of revenue efficiency of overhead spend 4 payroll of revenue biggest cost lever in most smbs keeps staffing in check 5 months of cash runway risk gauge how long you can survive without new cash coming in 6 dso days sales outstanding how quickly sales turn into cash in the bank reports profit and loss statement cash flow statement balance statement tax filings data points revenue cogs opex payroll cash balance avg net outflow ar 6 essential metrics revenue growth shows if the business is actually scaling gross margin core unit economics tells you if sales are profitable opex of revenue efficiency of overhead spend payroll of revenue biggest cost lever in most smbs keeps staffing in check months of cash runway risk gauge how long you can survive without new cash coming in dso days sales outstanding how quickly sales turn into cash in the bank note technically for a number to be metric it has to combine two numbers income is just a data point but income per month is a metric without the foundational data and reports listed above it s difficult to run a business to build those reports you need clean financial books which you ll need anyway to raise money open bank accounts file taxes or prove your creditworthiness any small business just starting out should get its financial books and reporting in order how to choose the right metrics for your small business goals metrics should tell you what to do differently if your goal is to grow look at your overall income how it changes month over month and how it s forecasted to grow if your goal is to become more profitable track your margins net retained revenue and customer satisfaction as your goals change so should your metrics a retailer just getting off the ground is probably happy just to be making sales whereas a well established one will be more focused on gross margins and gross profit per sku ask yourself am i trying to optimize what we have or get bigger and are you new in your field or established leading versus lagging metrics you ll also want to balance your metrics between two categories leading how things are going and lagging how things went revenue is a classic lagging indicator it s how much money actually hit your bank account or which you signed contracts for whereas pipeline is a leading indicator it suggests how much revenue is coming lagging indicators are truer but you don t measure them until after the month or quarter ends leading ones are more of a guess but tell you what to do differently before it s too late to run a business you need both leading indicators forecasted sales sales pipeline expenses for the month to date forecasted average basket value lagging indicators revenue booked the month s actual expenses historical average basket value leading indicators lagging indicators forecasted sales sales pipeline revenue booked expenses for the month to date the month s actual expenses forecasted average basket value historical average basket value the small business metrics worth tracking on your dashboard now let s consider what fits on a dashboard which you ll look at daily weekly or monthly and actually use leading indicators help you plan ahead these answer the question what should i do headcount growth pipeline customer acquisition cost cac inventory levels total invoices sent and unpaid debt balance lagging indicators measure what s working these answer the question how did it go revenue for the trailing 12 months ttm payroll ttm expenses ttm sales efficiency current cash balance grouping small business metrics by function depending on the size of your business you might also select key metrics for each business unit for example go to market sales growth marketing conversions delivery on time orders chargebacks number of returns operational headcount return on capital how to turn small business metrics into better decisions the metrics on your dashboard are not exactly the truth they re just a proxy take revenue for example the total revenue booked number you see is the total amount customers owe you but in reality some will cancel you ll pay bank fees and some customers will upgrade so the actual number will always vary this matters because you must know those metrics well enough to know what to do if they fall if you see your gross revenue falling it helps to know how that number is collected instead of immediately sending collections invoices to customers you might know that your bookkeeper is responsible for marking invoices as paid in quickbooks and has been out sick so you may have been paid it just doesn t look like it being an owner means developing a personal playbook for how to react to what the numbers tell you what to do if your metrics change kpi if it do this revenue growth falls check data is recorded correctly break down by product channel what changed talk to sales funnel training or product issue can you win back customers or run a promo gross margin rises confirm cogs postings are correct compare margin by product service what shifted can you reprice renegotiate vendors or adjust discounting opex of revenue rises compare this month s expense list to last month s what s new look at cards accounts who owns the spend can you cancel cut or renegotiate those costs payroll of revenue falls is revenue growth keeping pace with headcount are new hires revenue generating or overhead if not how will you offset to protect margins months of cash runway falls check burn calculation any one offs project forward when does cash dip below 6 months can you trim burn speed up receivables or raise capital days sales outstanding dso rises verify invoicing data is accurate which customers are slow by segment can you tighten terms follow up faster or incentivize early payment what to do if your metrics change if revenue growth falls do this check data is recorded correctly break down by product channel what changed talk to sales funnel training or product issue can you win back customers or run a promo if gross margin rises do this confirm cogs postings are correct compare margin by product service what shifted can you reprice renegotiate vendors or adjust discounting if opex of revenue rises do this compare this month s expense list to last month s what s new look at cards accounts who owns the spend can you cancel cut or renegotiate those costs if payroll of revenue falls do this is revenue growth keeping pace with headcount are new hires revenue generating or overhead if not how will you offset to protect margins if months of cash runway falls do this check burn calculation any one offs project forward when does cash dip below 6 months can you trim burn speed up receivables or raise capital if days sales outstanding dso rises do this verify invoicing data is accurate which customers are slow by segment can you tighten terms follow up faster or incentivize early payment if you cannot connect a metric you have deemed important back to a lever you can pull that s worth investigating why is that beyond your control how can you change that over time you develop an intuition about what changes in your key metrics mean for example let s say you see your monthly sales fall at one location only is it the signage are there new competitors did a nearby big box store close down which used to bring traffic then based on your investigation run the plays you know will help turn things around running ads adjusting the staffing schedule using contractors and the like essential small business metrics by industry now let s explore metrics packages useful to various industries you ll have to decide whether you are on the early or established side of these and which metrics within each to pick professional services like consultancies and agencies current cash balance forecasted cash balance forecasted incoming cash total invoices sent and unpaid debt balance and interests forecasted debt payment invoices sent and cash received payroll payments by month broken down by individual hours per person per project client ecommerce consumer goods and retail topline metrics gross sales net sales sales dilution rate average order value repeat rate return rate unit economics gross profit contribution margin inventory turnover ratio marketing and website metrics customer acquisition cost cac marketing as a percentage of sales customer lifetime value customer acquisition costs customer retention cost traffic site conversion rate basket size funnel metrics food and beverage unit economics cost of goods sold gross profit margin menu item profitability break even point marketing and sales customer acquisition cost cac customer retention rate customer satisfaction operations on time deliveries employee turnover rate how to build on your metrics and run smarter some small business owners run into a knowledge gap around metrics they know how their business runs but turning it into excel models with buttons and macros they simply don t have the time that s where it can be very useful to find a fractional cfo or similar partner who does this for a living there are 33 million small businesses in the u s and likely if you want to track something someone s done something similar before to build on your great metrics work consider reading bookkeeping checklist what every small business needs bookkeeping basics for small business owners how small business owners can use ai to save time and boost productivity key takeaways the key takeaways about the most important metrics are this don t track numbers you don t plan to use get a bookkeeper to set up your data foundation right select 3 4 key metrics that matter most with sub metrics build a dashboard and know how to update it tailor that basket of metrics to your business and growth stage faqs about small business metrics what are the most important small business performance metrics to track pick 3 4 key metrics that tell you how you are doing toward your goal depending on that goal you ll pick different metrics if you are growing the business focus on new revenue if you are optimizing the business focus on retained revenue or customer satisfaction it also may go without saying but tailor that list based on the nature of your business what s the difference between leading and lagging indicators a leading indicator tells you how things are currently going such as sales pipeline or website traffic lagging indicators tell you how things went how many sales you actually closed or how many website visitors actually purchased every business needs a mix of both how often should small business owners review metrics most small business owners look at their metrics daily it s a useful view of how it s performing financially which can help tell you where to focus your attention usually on what s not going well how do i know if i m tracking too many metrics list them right now off the top of your head if you had to look away and really think about it it s probably too many but the real assessment is do they help you run your business it s difficult to answer yes when you can t recall them all you can have many sub metrics but try to stick to 3 4 key metrics can i automate my small business metrics tracking to a degree yes the best way to do this is to have a fractional cfo build you a google sheets model that they maintain by uploading reports from your various systems like quickbooks shopify rippling stripe and gusto contact sales don t miss how much should you be paying yourself as a founder see the report suggested reading how clean bookkeeping helps you get a small business loan smb maebellyne ventura find a co founder who loves what you hate smb mark gervase how to start paying yourself as a business owner smb mark gervase view all articles see what pilot can do for you learn how the pilot portal streamlines communication offers valuable insights and saves you time so you can focus on growing your business info pilot com services bookkeeping outsourced operations cfo services tax r d credit startup booster smb booster industries startups health medtech small businesses 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