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Numbers every business owner should know: A Quick Guide Part 2 KPIs

March 27, 2023

Key Performance Indicators (KPIs)

Financial statements show you trends of what is happening in your business. But they only give you a general overview of what is going on. They don’t zero in on specifics.

Your Key Performance Indicators, on the other hand, are detailed. They give you specific numbers regarding specific parts of your business.

There are countless KPIs. Which indicators you use will depend on your business’s aims and objectives.

Things present in your KPIs but absent from your financial statements include:

  • Overhead rate.
  • Cost per lead.
  • Conversion rate.
  • Average cost per client.

Here are some KPIs you might come across. This list is by no means exhaustive:

 

KPI Description
Gross profit margin A proportion of money remaining after subtracting production costs
Net profit margin This is a calculation that tells you how much of total income counts as profit.
Inventory turnover. This is a financial ratio showing how many times a company has sold and replaced inventory.
Return on investment This is the benefit an investor receives compared to their investment.
Drop off rates The number of people who leave a website without taking action.
Revenue growth rate A measurement to find out how well a company is able to grow in terms of sales over a certain period.
Accounts payable Money that you owe other institutions and individuals.
Accounts receivable Money that you are owed.
Conversion rates The number of conversions divided by the number of visitors.

General tips

Keep an eye on your KPI dashboard. Whether it’s the stats page on your social media manager, or it’s your conversion rates, most KPIs are available on a dashboard.

Only focus on necessary numbers. Certain figures are nice to know, but you will likely never use them in your strategy.

Keep numbers simple. Don’t make them complicated to the point you don’t want to do them anymore. 

Numbers every business owner should know – how are you keeping up?

 

Not sure what numbers are essential? Are you overwhelmed?

It’s okay. Numbers are not easy. If you are struggling, I’m always happy to help. Book a call today.