Financial Metrics That Matter: Key Performance Indicators for Small Business Success
Heard the phrase “know your numbers”? Well, it’s not just some corporate buzzword; it’s your secret sauce to making money moves. Here are the KPIs you actually need.
Cash Flow: More than the number in your bank account. Track inflows vs. outflows and forecast so you don’t end up hustling to meet payroll.
Profitability Ratios: Gross margin, net margin—these show if you’re actually making money or just playing entrepreneur for the ’Gram.
Customer Acquisition Cost (CAC): Know how much you spend to get a new customer. If that number is too high, Houston, we have a problem.
Customer Lifetime Value (LTV): How much each customer will generate. If LTV > CAC, you’re golden; if not, it’s time to re-strategize.
Inventory & Receivables: Too much stock ties up cash; late receivables do the same. Keep these in check to avoid being “paper rich, cash poor.”
Break-Even & Contribution Margin: Understand where your revenue surpasses expenses. It’s the line between sinking and swimming.
Bottom Line: Track the right metrics, make informed decisions, and watch your small biz thrive. Numbers don’t lie—just ask your CPA.