Key Financial Metrics Every Small Business Owner Should Monitor

Having a good understanding of what key metrics to track is important for keeping your business financially healthy. Financial metrics are often called key performance indicators (KPIs) which act like a scoreboard for your business, showing you how well it’s really doing.

Are you turning a profit? Are you moving toward your goals? These insights can help you make smarter decisions and stay on the path to growth.

In this blog, we will gain an understanding of the importance of tracking financial metrics, explore key examples and how your business can benefit from KPIs.

Why Track Financial Metrics?

Tracking financial metrics is important for several reasons, all of which contribute to the overall growth, health, and sustainability of a business. These insights help you see what’s working, what needs attention, and how you can keep moving forward with confidence.

Here are some other reasons why you should track financial metrics:

• Performance Evaluation – See how well your business is doing and identify areas for improvement.
• Strategic Planning – Make informed decisions and set realistic, data-driven goals for the future of your business.
• Investment Decisions – Know when it’s the right time to invest in growth, new hires, or expansion.
• Competitive Analysis – Compare your performance with others in the industry and stay ahead of key trends.

What Metrics Should I Track?

There are a variety of financial metrics your business should track in order to become more financially stable. Having stability is key to running a successful business and here are the key metrics to track to do so:

Revenue Metrics

What is this?
Revenue metrics are key performance indicators that are typically used to measure the amount of money a business is bringing in over time.

Why is this important?
This helps business owners identify the progress made by evaluating income growth or decline.

How do I measure this?

• Total Revenue
• Revenue Growth Rate
• Gross Margin
• Net Revenue

Profitability Metrics

What is this?
This is a performance indicator tool that businesses use to assess their financial performance such as profit from sales.

Why is this important?
It allows comparison of income with expenses, helping manage finances more efficiently.

How do I measure this?

• Gross Profit Margin
• Operating Profit Margin
• Net Profit Margin
• Return on Assets
• Return on Sales

Cash Flow Metrics

What is this?
Cash flow metrics measure the amount and timing of cash generated by a business.

Why is this important?
These metrics give insight into your company’s liquidity, solvency, and financial health.

How do I measure this?

• Operating Cash Flow
• Free Cash Flow
• Cash Flow Margin
• Net Cash Flow
• Cash Flow from Financing Activities

Debt Metrics

What is this?
Debt metrics assess a business’s leverage, financial stability, and debt-repayment capacity.

Why is this important?
They provide insights into risk and debt management capability.

How do I measure this?

• Debt-to-Equity Ratio
• Debt-to-Assets Ratio
• Total Debt
• Net Debt
• Cash Flow to Debt Ratio

Customer Metrics

What is this?
Customer metrics help businesses understand customer behaviour, satisfaction, and value.

Why is this important?
They provide insights into the customer experience and opportunities for improvement.

How do I measure this?

• Customer Acquisition Cost
• Customer Lifetime Value
• Repeat Purchase Rate
• Customer Engagement

How to Find the Right KPIs for Your Business

Finding the right KPIs for your business involves a strategic approach. Use KPIs that align with your business goals to ensure consistent progress.

Choose measurable, current KPIs and track them over time to gain valuable insights into performance and areas for improvement.

Need Financial Advice for Your Small Business?

Here at Haggards Crowther, we are a family-run company of Chartered Accountants and Chartered Tax Advisers. If you are looking for key financial advice, our experienced team is passionate about supporting your business needs.

We guide you through managing your finances and developing a strategy to achieve your business goals. Our team is driven by core values and always puts your interests first.