When you’re the one spinning all the plates as a business owner, you might think that you know exactly how your business is doing. But unless you’re monitoring some all-important business metrics, you may not be seeing the full picture.
Don’t be put off by the technical term. Business metrics are often simple to track and can offer crystal-clear insights to help you bring the full picture of your business performance into focus.
What are business metrics?
A metric is a system for measuring something, and a business metric is used to measure business performance. Business metrics are usually numerical, but that doesn’t mean they always have to be financial. Metrics could range from your average profit margin to the size of your social media following. Whether financial or non-financial, business metrics can help you pinpoint where your business is doing well and show you where there’s room for improvement.
What’s the difference between a business metric and a KPI?
All KPIs (key performance indicators) are business metrics, but not all business metrics are KPIs. Confused? Bear with us… Think of ‘business metric’ as a broad term that covers lots of different ways of measuring a business’s performance. While a KPI is just as its name suggests - a metric that you’ve identified as being key. So a KPI is a trackable measurement that you can rely on to help you evaluate the success of your business.
Which business metrics should you be monitoring?
There’s no hard and fast rule for which business metrics you should be tracking - it really does come down to the unique setup of your business. However, there are a few metrics that are pretty crucial to most businesses and could help you unlock some new insights into your business performance. Here are some examples:
Cashflow is the amount of income your business has received over a period of time, minus the amount spent by your business over the same time. This common metric can provide a clear insight into your business’s health. Tracking your cashflow can be done manually in a spreadsheet, or accounting software like FreeAgent can do it for you automatically.
Keeping a watchful eye on your business expenses can help you save money, cut down on unnecessary costs and make sure that your business stays financially healthy. Monitoring your expenses over time can also help you spot trends and patterns, and make sure that your outgoings aren’t breaking the bank.
Try FreeAgent’s expense management for a simple, no-fuss way to manage your business expenses.
If you don’t do it already, tracking the number of visitors to your website is a quick and easy way to measure awareness of your business and how well you’re marketing it. You may also want to look at how your website visitors arrive at your site, how long they spend on it and what pages they look at.
Tracking something as simple as your number of website visitors over time will give you a clear picture of how many people you’re reaching, and whether there might be room for improvement in your marketing strategy.
Websites built with tools like Squarespace and WordPress often include built-in tracking to help you monitor data. Or, if you’re more of a web whizz, consider using more advanced website analytics tools to dive deeper into the data.
FreeAgent can help you get the full picture of your business performance with a 90-day cashflow forecast, intelligent insights into business performance and a suite of reports - including a Performance Benchmarking report which lets you see how you compare to your competition. Try a 30-day free trial today.