Business metrics are important data points for making strategic decisions and having a solid process for tracking metrics can help you scale your business faster and easier.

Are you the type of entrepreneur that runs your business entirely from your gut and waits until the end of the year to see if you had a good one? Or are you so busy tracking all the things you could possibly track in your business that you’re overwhelmed by all the data and not exactly sure what to do with all the information?

Most of my private business coaching clients come to me somewhere in the middle: they have a ‘good enough’ sense of their numbers and look at their analytics from time to time, but they don’t really have the data to tell them exactly how they’re doing and where to focus or when to pivot.

For most people it’s easier to keep your head buried in the sand when it comes to numbers, metrics, and data. But, contrary to popular belief, ignorance is not bliss in this situation… in fact, it just creates a lot of stress. 😂

Not knowing how your business is performing creates unnecessary uncertainty and prevents you from being proactive & strategic in growing your business.

When you understand exactly which metrics matter in your business, what questions you should be asking, and how to use that information to your advantage, you can build a strategy that genuinely makes a difference on your sales & growth.

So, whether you’re embracing your inner ostrich and keeping your head buried in the sand when it comes to your numbers 😂, or you’re a nerd like me and building the world’s prettiest dashboard sounds like a fun Friday night, this article is going to help you identify key business metrics and how to start tracking metrics so that you can scale successfully.

What are business metrics and KPIs?

Metrics are basically anything you can measure in your business: # website views, % class attendance, # hours spent on X. If it’s quantifiable, it’s a metric.

KPIs are the important metrics that measure the health of your business. They correlate with an outcome that you’re working toward, and show you your progress toward that outcome.

While all KPIs are metrics, not all metrics are KPIs. KPIs are chosen with strategic intent because they reflect the goals of the business.

An example of a metric vs a KPI

A metric would be # followers on social media. This metric measures brand awareness or popularity, but it isn’t a KPI (unless your only goal for your business is to become the most popular on social media). If you’re just measuring followers, you’re not looking at the data that actually matters for your business.

A KPI would be % followers that convert (ie. so followers that take a specific action like downloading a resource or purchasing a product). Assuming your goal is to get more clients (not to be the most popular on Tik Tok), this KPI will show you how effectively you’re using social media to achieve that conversion goal.

Why is it important to define & track metrics in your business?

In an age of information overload, knowing what you need to pay attention to is more valuable than ever.

With all that goes into running and growing a business, it’s easy to get overwhelmed by how many things you need to do or could be doing. This causes so many entrepreneurs to spread themselves too thin trying to keep up with everything, and spin in circles without really getting anywhere.

It’s why we developed a personalized quiz to help you pinpoint exactly where you should focus to grow your business to the next level. You can take it right now to find out what area of your business needs your attention this year (plus you’ll get a free report with resources on how to improve it!)

If you want to scale your business to the next level, you need to know what’s actually contributing to your growth and how to further improve it. Clearly defining KPIs and tracking metrics allows you to focus on the right things.

When you don’t have clear KPIs defined, you’re either:

Paying attention to the wrong business metrics, allowing irrelevant numbers to distract you, pivoting your strategy every few weeks, OR you’re
Not paying attention to important business metrics and missing the red flags that tell you you actually do need to pivot your strategy because your current efforts aren’t yielding results and you’re just wasting time, energy, and money

Having clear KPIs defined, tracked, and regularly reviewed in your business allows you to

Know whether or not your strategy is working
Know when it’s time to pivot
Proactively make changes before potential problems become crises

What are Leading Indicators vs Lagging Metrics?

There are so many numbers you can track in your business, but just because something can be tracked, doesn’t mean it should be tracked.

Lagging metrics reflect results that have already passed while leading indicators predict future performance.

When it comes to tracking business metrics, you want to make sure you’re not just looking at lagging metrics, but you’re working toward improving the leading indicators that influence those business metrics.

For example, total monthly revenue is a lagging metric – the money you made last month is money you’ve already made and it cannot be changed or influenced. But the number of free consults booked would be a leading indicator, predicting future revenue to some degree – you know that the more free consults you book, the more money you tend to make.

Lagging metrics AND leading indicators are both important for your business. After all, you not only want to know how much total monthly revenue you made, but you also want to be really clear on what you can go out and do to influence that number.

Focusing on metrics within your control

The best leading indicators are within your control.

If you want to grow your business, focusing on “revenue” doesn’t actually help you because you can’t ‘action’ anything there. However, focusing on the number of free consults booked is more helpful, because you can then focus on getting free consults out there.

But what if you went a layer deeper instead and focused on free consults offered is a leading indicator to consults booked?

And if you go even further, the number of new conversations started would help you get more consults offered.

As you can see, most metrics are both lagging indicators of one thing AND leading indicators of another thing.

The important thing to focus on is whether you’re getting your metrics down to a level where you feel you can ACTION them.

5 key questions every business owner must be able to answer

The thing that makes data feel so intimidating for most people is that we picture spreadsheets with endless rows and columns that take hours to populate and get us nowhere in the end.

However, tracking metrics doesn’t have to be complicated or time consuming.

The best way to track KPIs in your business is to focus on answering questions that you actually want to know the answer to in your business.

These are questions like:

How much money am I making and keeping in my business?
Which products are performing best?
Are my customers happy?
Is my marketing actually getting me clients? Do I need to focus on awareness, nurturing, or conversion to drive more sales?
Is my team working effectively? Is paying my team actually helping me grow the business?

When you ask questions and track metrics to answer them, the numbers have context and become more useful for your business.

(This is much different than tracking the number of views on every social media post that goes out just because someone told you you “should” be tracking things.)

Let’s review some of the important business metrics you should be tracking in your business to help you analyze your performance and scale to the next level. I’m going to break these down into 5 categories:

Financial Metrics
Sales Metrics
Team Metrics
Customer Metrics
Personal Metrics

In each category, I am going to share a couple metrics that you’ll want to be tracking in your business. (This is by no means EVERYTHING you should be looking at, as the important metrics depend on what you’re working toward and the nature of your business. But this is a great starting point!)

Financial Business Metrics to Start Tracking

Knowing the financial health of your business is critical to sustaining it long term.

I’ve had clients that couldn’t tell me how much money they made or kept in a month and that is definitely a concern. If this sounds like you, let’s go over the key financial metrics to be tracking in your business.

There are so many numbers you could track (an entire industry of accountants lives for this) but there are 4 key financial business metrics you should definitely be looking at regularly:

Revenue: how much money did you make in your business?
Profit: how much of the money you made did you actually keep?
Expenses: in order to get profit, you’ll have to: how much money did you spend in your business?
Progress to goal: based on your financial goal for the year, what’s your progress & what’s left to go? This might be a % or a $ left to go.

There are SO many other metrics you may want to look at depending on your strategic goals for the year, but at the very least, you should be reviewing these to get a good understanding of the financial health of your business and have visibility to your growth goals.

Sales Business Metrics To Start Tracking

When you want to grow your business, knowing how your sales process is performing is critical. It allows you to make the tweaks you need to make to actually drive more sales, rather than passively hoping that more customers knock on your door.

Being a business owner myself, and having been behind the scenes of dozens of businesses, I know how easy it is to drop the ball on marketing or sales when other things come up.

Whether you’re at capacity with client work and stop marketing because you can’t take on more work, or you’re fighting fires and don’t have time to sell, there’s always a tradeoff to being inconsistent in your marketing & sales.

Having clear marketing & sales KPIs can help you stay focused on the things that help grow your business so that you always have a consistent list of warm leads to pull from.

Sales metrics fall into 3 categories:

Awareness
Nurturing
Conversion

Let’s say you’re a service provider who raises awareness through content marketing with your blog, nurtures prospective clients through email marketing, and converts through discovery calls, here’s what it might look like to track each of those steps:

Awareness Metrics & KPIs

Lagging Metric: blog traffic (# of visitors)
KPI: # Pinterest impressions on pins promoting the blog (leading indicator of how many blog visitors you’ll get)
KPI: conversion rate from visitor to lead (# of lead magnet downloads)

Nurturing Metrics & KPIs

Lagging Metric: # email subscribers
KPI: email open & click through rates (because it doesn’t matter how many subscribers you have if they aren’t reading your content)
KPI: # subscribers opening >80% of emails (this qualifies your leads and shows you who’s actually likely to become a client)

Conversion Metrics & KPIs

Lagging Metric: # new clients (lagging metric)
KPI: # discovery calls offered (leading indicator of the above) & discovery call conversion rate (% yeses)
KPI: # personal conversations started (this is a leading indicator of discovery calls being offered so you want to be sure this is happening)

These metrics and KPIs show you how your sales funnel is performing at each stage of the sales process. You can use this data to see where you need to focus in order to drive more business growth.

(In order to pinpoint the right business metrics for you, you’ll need to apply this example to your specific sales funnel.)

Productivity Business Metrics To Start Tracking

Whether you’ve got a team of 5 people helping you grow your business, or you’re a solopreneur, you want to know whether your time is being spent wisely.

Are you executing on projects efficiently (ie. are they being completed on time and on budget?) Are you working on things that will grow the business or is your time getting sucked into administrative tasks?

Some business productivity metrics you can track to help you gauge team effectiveness include:

% projects completed on time (or avg # days projects are overdue)
% time going to IN work vs ON work vs Admin work

Toggl is a great tool to use to help you track where your time is going.

Customer Satisfaction KPIs to Track In Your Business

Too many entrepreneurs get hyper focused on sales and marketing and forget entirely about delivering an incredible customer experience. Not only does this suck for the customer, but it actually creates a business that’s challenging for you to run if you’re constantly churning through customers instead of retaining them long term.

Your customers are the bread and butter of your business.

Here are some business metrics and KPIs you can track to ensure customer satisfaction:

Metric: # customers gained/retained, # customers lost, avg attrition rate of customers
KPIs: track the stuff your customers care about! $s saved, days to completion, response time, etc.

A great example of this is any fast food chain that has figured out that what their customers want is their food, and fast. So every McDonald’s has installed giant screens that track how long an order has been waiting and start flashing red when the poor teenager working that night has exceeded a predefined threshold.

You need to do a version of this too: figure out the top 3 things that matter most to your customer/why they’re hiring you and track your performance across those metrics.

If you’re doing billing for your customers, perhaps they care most about their Accounts Receivable number – track $ AR for each of your clients and work your *ss off to get that down!
If you’re doing their accounting, perhaps they care most about the number of days it takes to get their financial reports after month-end – track it and work to get it down!

Whatever the metric is your customers care about, start tracking it across each of your customers so you can see how you’re performing. This is a leading indicator of whether your customers are going to stay or go.

Personal

Finally, if you’ve been around here a while, you know that I’m a big proponent of not just taking care of your business, but taking care of yourself. As a business coach, I help high performers grow thriving businesses without the grind (read more about me here).

After all, the biggest leading indicator of your business’ performance is YOU and your performance.

If you’ve got the physical and mental energy to show up at your best, your business will go so much further than if you’re running on exhaust fumes and struggling to think clearly.

So, track the things that give you the physical and mental energy to be the best CEO!

(If you’re curious to know what high performing entrepreneurs are doing to operate at their best, read this blog post on the Top High Performance Habits of Successful Entrepreneurs)

Your personal performance metrics might include

Percentage of days you worked out
Average hours of sleep
Number of days you unplugged fully from the business
Average number of vegetable servings or cups of water per day
Percentage of days you meditated or journaled

Figure out what gives you the mental clarity and energy you need to perform at your best and start keeping track of how consistently you’re prioritizing them.

After all, prioritizing your mental & physical energy IS a business growth strategy.

How to make tracking business metrics easy & useful

If you’ve never tracked a KPI in your business before, getting started doesn’t have to be overwhelming.

Here are the top 3 mistakes entrepreneurs make when it comes to tracking KPIs and what you can do differently in order to make data easy and useful in your own business:

1. Don’t track everything you can get your hands on: This leads to overwhelm, time wasted getting and reviewing information that doesn’t matter, and a sense of frustration when you don’t know what to do with all those numbers.

Instead focus only on the business metrics that matter right now based on the goals you have for your business in this season.

2. Don’t bury information in crowded spreadsheets that give you migraines: it will be so hard to get to the information that you’re not actually doing anything with it.

Instead, make the information visual, easy to access, and easy to understand. You can always dig into it further if you need to.

3. Don’t gather business metrics if you’re not going to look at the data: this wastes so much precious time and slows you down strategically because you’re not using information that you have at your fingertips!

Instead of gathering data just to say you do, set up a process to regularly review it and make informed decisions in your business strategy.

The bottom line is that with every goal you set in your business, you should know the business metrics and KPIs you’re going to track in order to assess your progress toward that goal, judge the efficacy of your strategy, and pivot your approach as needed.

The days of throwing spaghetti at the wall and seeing what sticks are over. You’re not here to work a thousand hours and make a few bucks, you’re here to build a wildly successful business that supports the life you desire.

In order to scale your business to the next level, you need to know exactly what to pay attention to and how to use that data to inform your strategy.

This is exactly what I help my private business coaching clients do: identify the gaps in your business and how to fix them so your business can run like a well-oiled machine and your time and energy can be freed up to do more of the things you love.

If you’re ready to scale to the next level, book a free discovery call to see how I can help you free up your time and energy and grow a thriving business that supports a fulfilling life.

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