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Key Performance Indicators: 6 Important KPIs For Small Business Owners

What is a KPI or Key Performance Indicators?

So you’ve decided to start a small business and you’re well on your way; you have a website that’s generating mild traffic, you have a couple of employees to delegate tasks to, and you may even have a few sales.

One of the most crucial things you’re going to have to learn as a new small business owner is how to accurately assess your business’s potential for growth beyond simply the sale of your product or service. You do that through KPI’s, or, key performance indicators.

What’s A KPI?

Key performance indicators are defined by measurable values that assist with revealing how well your business is meeting performance goals. They must have a quantifiable objective that can be used to determine how well it is progressing towards the completion of that task. In order to be truly effective, KPIs should be relevant to your business and the task must be attainable within a given timeline.

For example, instead of tracking general sales, you can pinpoint one product and assess its likeliness to be sold over the course of one month. If it’s flying off the shelf, great! Order more. If not, maybe it’s time to consider removing it from your store.

Why Should I Use KPI’s?

A company’s success ultimately boils down to how well it is utilizing strategic planning in all aspects of the business. It’s important to regularly check in on the strategic plan that’s set in place to assess how well all departments within your organization are adhering to your key objectives. This includes communication within employees, internal processes, customer satisfaction, and more.

While using KPI’s on a one-off basis is unlikely to yield impressive results, over time, KPI’s can bring incredible value to the quarterly strategic planning meeting to encourage better processes and faster, more efficient, growth.

What Are The Most Important Key Performance Indicators?

As a small business owner, there are many KPIs that can be useful to assess your companies potential for growth, but when you’re just getting started the idea of tackling all of them could be overwhelming, in particular, while you’re still getting comfortable understanding the data it provides. For that reason, we’ve compiled a list of some of the most critical KPIs to your company’s long-term success.

1. Cash Flow

One of the most important things to track as a small business owner is where your cash is going and coming from. This is sometimes referred to as forecasting your cash flow. Without assessing your cash flow on a regular basis, you could quickly be setting your business up for failure with inappropriately set margins and expectations. To assess your cash flow, you’d take your projected cash intake to your business savings over four weeks and subtract your projected cash expenditure over the same time frame.

This KPI is critical to identifying potential financial problems early so that you can assess your business strategy and correct their alignment towards your objective, which is, of course, to make more money, not run out of it.

2. Revenue Rate

Beyond keeping an eye on your cash flow, you want to take careful consideration of how well you’re bringing in revenue. Without assessing your revenue rate, you’ll have difficulty knowing with certainty if your sales are decreasing, plateauing, or hopefully, increasing.

Knowing this data can be used to prompt a change in strategy to correct any misalignment, say perhaps, by offering new customers an incentive to purchase your product or service.

3. Market Share

Another KPI you’ll want to keep an eye on is your business’s relative market share. This shows you how well your business is performing within your given market as determined by the percentage of control you hold. First, find out what your market share and then subtract that figure from 100. This will give you the percentage of the market that other businesses control. Then, you’ll determine what your relative market share is by dividing your market share by the percentage you don’t control.

This will help you assess how well your business or product is performing against its competitors and with this information you can improve the long-term sustainability of your business and its profitability with careful strategic adjustments.

4. Tax Planning

Nobody wants to be mismanaging important information like how much tax you’re incurring from your sales so that you know exactly what amount from your revenue stream should be set aside for the government. By missing this critical step, you have the potential to make errors like late payments which can turn into hefty fines and penalties.

Your business’s required sales tax payments might be required monthly or quarterly dependent on where you are located, so it’s important to locate that information before you begin selling and monitor it thoroughly throughout the year.

5. Web Traffic

Just as you would want to be aware of how many potential customers walked into your brick and mortar store, in this digital age, you’ll want to keep tabs on how much web traffic your business is generating, too. After all, it is the world’s largest marketplace.

You can use KPIs to track the number of visitors you’re getting, what time they tend to visit, where they’re from and what links caught their interest on your website. All of these data points are crucial to increasing your online presence and identify key areas that require improvement.

6. Percentage of Sales by Customer

While even a single sale could be a victory for any small business, have you thought about the value that could be brought to your company by assessing the percentage of sales that is made up of individual customers? Simply put, if you notice that certain customers are not only returning, they’re also spending most of their money on particular products, you’ll know to tailor your marketing to that customer about that product or category of products, say by unleashing strategic newsletters informing them of new stock in the store.

Effectively, this is nourishing the customer relationships that are providing the most profit to your business by simply giving the customer what they’re telling you they want, and they’ll be happier for it, too!


As you can see from above, there are many different aspects of your business that require detailed attention, and the best way to assess their needs is by using carefully curated key performance indicators. It can seem overwhelming at first, but the more comfortable you become with reviewing your KPI’s and implementing new strategies around them, the sooner you’ll start to see your objectives being met.

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