Guide: The Best Financial KPIs for Small Businesses

Jan 25, 2021

Guide: The Best Financial KPIs for Small Businesses

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Whether you’re a hardcore sports fan or you’d rather run errands than watch a major league game, you have to admit that the sports world knows how to handle metrics. Pick any sport—they all have unique systems in place to analyze past performance, track current performance, and project future performance.

Just like with a pro athlete, your small business has plenty of data that can only be discovered through careful tracking. Without these metrics, you’ll never be able to identify weaknesses and fully leverage your strengths. Sure, you can always read over your balance sheet. But there’s so much more to the picture than just the basics of profit and revenue.

Among the most valuable elements in your business tracking toolkit are key performance indicators (KPIs). KPIs help you to measure the performance of your company, projects, and team members. Guided by this real-time data, decisions become more strategic, goals become more attainable, and your business keeps moving in the right direction.

“Big businesses have been using KPIs to measure their success for years,” explains financial guru Tim Clairmont. “Yet many small businesses ignore this less-understood acronym. Employees can measure their success by comparing the results of their KPIs over time. A manager can see if an employee is improving and if they are outperforming other employees by looking at their KPIs and tracking their results. But if you are self-employed or running your own firm, then who is there to tell you what your KPIs are? Are you letting your business run you, or are you running your business? Moving from salesperson to businessperson or moving from a small business to a larger business requires a change in perspective. And one great place to start is to figure out your KPIs.”

Of course, it’s not enough to say simply that your business needs KPIs—that’s as broad as saying that your business needs advertising. It’s only when you break down the details that you put yourself in a position to execute. Just like an advertisement can take a vast array of forms and appear on a nearly countless number of mediums, there are many potential KPIs to consider for your small business.

About the Author

Grant Olsen

Grant Olsen

Grant Olsen is a writer specializing in small business loans, leadership skills, and growth strategies. He is a contributing writer for KSL 5 TV, where his articles have generated more than 6 million page views, and has been featured on FitSmallBusiness.com and ModernHealthcare.com. Grant is also the author of the book "Rhino Trouble." He has a B.A. in English from Brigham Young University.

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