Small Business KPIs: Best Ways To Set, Track and Nurture Them Properly

Small Business KPIs: How To Set, Track and Nurture Them Properly 1

Small business owners often wear many hats and have a lot of responsibilities. One of the most important, but often overlooked, is tracking and nurturing key performance indicators (KPIs).

Small businesses need to set KPIs that are relevant to their business, track them regularly, and nurture them properly in order to see success. In this blog post, we will discuss small business KPIs and how you can best set, track, and nurture them for your company!

It is not healthy for a business to operate without Key Performance Indicators (KPIs); they are the pointers towards your business performance and growth.

KPIs help you as a business owner to set parameters that will show your business performance over time, such that you can easily determine if your business is healthy from the KPI reports.

KPIs are the basis of tracking progress; they help you plan, track, and achieve your business goals and make them successful. Generally, success is defined in different ways.

But no matter how each business chooses to define its success, KPIs help monitor the key aspects of the business; they point you toward the important metrics to monitor for your business growth.

Setting and nurturing your small business KPIs

While it is important for you to set small business KPIs, there is no one-size-fits-all approach to it. It should be set in accordance with the business type, industry, and needs. There are a couple of things that help you determine what to look out for and how to set your KPIs.

1. What are your long-term objectives?

What are your business’s long-term vision and objectives? How you see your business in the long term will determine how you run it now. Your business objectives will define what your KPIs should be.

2. Consider your business stage

At different stages of your business, different KPIs will be relevant. Your business’s short-term goals determine what the KPI should be.

3. What is most relevant to your small business?

To set effective small business KPIs, you need to carefully consider what is most relevant to your company’s success. For example, if you are in the e-commerce space and are looking to grow your customer base, then some good small business KPIs might be things like email open rates or website traffic.

On the other hand, if you are running a brick-and-mortar retail store that relies heavily on foot traffic for sales, some good small business KPI examples might be things like average customer spending, repeat purchases per customer, or conversion rate.

4. Track and monitor over time

Once you have identified the right small business KPIs, it is important to track them regularly and keep tabs on how they are performing over time. You may need to make adjustments to your small business KPIs as needed in order to stay aligned with trends in your industry and market conditions.

Additionally, you should also nurture these small business KPIs properly by monitoring and responding quickly to any issues that arise or opportunities that present themselves along the way.


Scale up with small business KPIs
Scale up with small business KPIs

These small business KPIs are a good place to start

There are a lot of KPIs to track. The ones stated below are not the only important ones, but they are the ones you should start with.

Net profit

This is a simple place to start, a small business should track its net profit over time, is your business getting more or less profitable year after year. While a lot of things can affect your business’ profitability over time, it is important that your business stay above those variables. 

Your net profit = revenue minus expenses. This will help you monitor your profit over a period of time.

Your profit margin

Your profit margin also referred to as your net profit margin, it also measures your profitability as a business. The gives you a picture of how much profit your business makes from its revenue over a period of time.

To calculate the net profit margin; Net Profit ÷ Revenue = Net Profit Margin.

Quick ratio

The quick ratio helps business owners monitor cash flow; they are able to see if the cash they expect to get is enough to cover the liabilities.

To calculate the quick ratio: cash+ marketable securities + accounts receivable ÷ current liabilities.

If your quick ratio is one or higher, that means you have enough cash and liquid assets (assets that you can quickly sell to get cash) to cover outstanding bills. A quick ratio of less than one means that it may be more challenging to cover your current liabilities.

Cost of customer acquisition

You need to know how much it costs to get a new customer for your business. Take note of all the costs of adverts and marketing in relation to the number of customers you are able to get.

Having knowledge of the customer acquisition cost is important so you can monitor the costs and make adjustments where necessary. It can also help you decide if you need to use other cheaper approaches to customer acquisition.

Your customer acquisition cost is; total sales + marketing expenses ÷ the number of new customers.

Conversion rate

Depending on the type of business you run, you can determine your conversion rate using different methods. The conversion rate measures how many prospects convert to become customers.

Tracking your conversion rate will help you to see if sales and marketing efforts have any effect on your conversion rate.

Conversion rate is a percentage of the sales made in relation to the prospects you have over a given period of time.

Gross margin ratio

The gross margin ratio, also known as the gross profit margin ratio, is a profitability ratio, it compares the gross margin of a company to its revenue.

It shows how much profit a company makes after paying off its cost of goods sold. The gross margin ratio is a percentage of the cost of goods sold and the actual amount it was sold.

Employee retention rate

The cost of hiring and training employees is a major expense; it can also be considered an investment. When a good employee stays longer with your company, it gives you, the business owner, a chance to get a return on the investment.

Small business owners should understand that they might need to work on employees’ satisfaction if more and more employees leave the business before they are able to get a return on their investment.


While there are other KPIs that small business owners should consider, the ones mentioned above are a good place to start. Also, understand that as your business evolves or your business needs change, you might need to change your approach to some of these KPIs or add some new ones.

If you are looking to set effective small business KPIs and effectively track, monitor, and nurture them over time, then seek out expert advice from experienced professionals who can help guide you every step of the way!

With the right tools and guidance, you can ensure that your small business is poised for success by effectively tracking, monitoring, and nurturing your KPIs. Good luck!

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