What is a KPI?

Definition of KPI

KPI stands for Key Performance Indicator. A KPI is an identified value that you measure over time to help you determine how certain areas of your business are performing.

A KPI could be something as simple as net profit, or something more complex like your average customer acquisition cost. KPIs are important in evaluating how healthy your business is, as well as helping you to identify your business’s weaknesses and strengths. They often end up being a percentage, a formula, or even a simple sum.

Deciding which KPIs are important for your small business can be daunting, but once you choose them you’ll likely find them both fascinating and incredibly useful.

Example KPIs for small businesses

Here are some examples of small business KPIs that you might want to consider tracking:

  • Profit margin
  • Sales for your top five customers
  • Year-on-year sales growth
  • Page views on your website

Got questions? Ask Emily!

FreeAgent's Chief Accountant Emily Coltman is available to answer your questions in the comments.

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