One report suggests that 4.3 million businesses were started in 2021 within the US.
If you’ve recently started a business, you should know how to identify and track key metrics. If you don’t know how to do this, it can be difficult for you to work out if your firm is doing well.
This post will highlight a few key business performance metrics you must keep an eye on. If you monitor these metrics, you should be able to improve your odds of success.
Let’s begin!
Net Profit
One of the most important business metrics you need to track is net profit. In simple terms, net profit is the money you have left over after you’ve subtracted expenses.
This is an important figure because it tells you how much money your business can keep in the bank. You can then use this figure to determine how much you can spend on hiring or even things like research and development.
If you want to make this figure easier to calculate, consider using a spreadsheet to track income and expenses.
Marketing ROI
If you want to improve long-term performance, you should also focus on the ROI of your marketing spend.
This metric will help you figure out which marketing approach is working. You can then use this knowledge to cut out tactics that are just sucking up a lot of money without providing much in return.
Note that if you want to calculate this figure accurately, you might need to invest in tools that are designed for this task.
Such tools will monitor your online campaigns and give you granular data on how people turn into customers. You can then use this data to optimize your campaigns and further improve business performance.
Accounting Rate of Return
When it comes to key performance indicators, “accounting rate of return” is another one that you’ll want to focus on if you want to hit company goals.
This metric will help you figure out how profitable a given investment is. This is critical if you want to identify whether you should double down on your current approach or if you should change course.
It’s worth mentioning that accounting rate of return can be a little difficult to calculate. Thus, you might want to read this article, to learn more about how you calculate this metric properly.
Will You Focus on These Business Performance Metrics?
The business performance metrics mentioned in this post are a good start for anyone looking to improve their odds of success.
Of course, the metrics mentioned here are just the tip of the iceberg. That’s because as your business grows, you will likely need to focus on other metrics as well.
Following this, you should review the metrics you are monitoring every 3-6 months. In doing so, you will develop a better sense of whether or not your current set of metrics are fit for purpose or if you need to adopt new ones.
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