Metrics
Five metrics every business owner should track
A focused dashboard approach—track what you can act on, not everything you can measure.
On this page
Most dashboards distract with too many numbers. Focus on metrics that drive action.
The Essential Five
Cash Runway measures Current cash divided by Average monthly burn. It tells you how long you can survive without new revenue. Target minimum 3 months runway.
Gross Margin measures (Revenue minus Direct costs) divided by Revenue times 100. It shows your pricing power and cost efficiency. Target is industry-dependent; trend matters more than absolute.
Receivables Days (DSO) measures (Receivables divided by Revenue) times Days in period. It shows how fast customers pay. Target close to your payment terms, typically 30-45 days.
Revenue per Employee measures Total revenue divided by Number of employees. It measures operational efficiency and should improve as you scale.
Customer Concentration measures Top customer revenue divided by Total revenue times 100. It measures single-customer risk. Target no customer exceeding 30-40%.
Making Metrics Actionable
| Metric | If Declining | Possible Actions |
|---|---|---|
| Cash runway | Investigate | Cut costs, accelerate collections, raise funding |
| Gross margin | Investigate | Review pricing, renegotiate costs, address wastage |
| DSO | Investigate | Tighten credit, improve collections process |
| Revenue per employee | Investigate | Review staffing, improve productivity |
| Customer concentration | Monitor | Diversify customer base |
Implementation
Weekly glance at cash and receivables. Monthly review of all five metrics with trend. Quarterly deep-dive for root cause analysis of any concerning trends.
Avoid
Tracking 20+ metrics creates analysis paralysis. Vanity metrics like impressions and page views without conversion are misleading. Lagging indicators only miss forward-looking signals. Metrics without owners remain unactioned.
This information is for educational purposes only and does not constitute professional advice.
If management still lacks a reliable scorecard, start by linking the issue to Fractional CFO Services, Accounting & Bookkeeping, and cleaner review routines under SOP Development.
This material is general information. Apply it to your business only after checking the relevant facts, source documents and requirements.