3 Metrics to Track for Small Businesses to Make Decisions for Success

Understanding what actually leads to a successful small business means…

Digging into the data (and analytics, and numbers…). 

And while diving into analytics and looking at the numbers miiiight seem overwhelming – especially for someone who isn’t that big into data – the truth is that tracking the right metrics can actually help simplify decision-making and, at the same time, pave the way for growth and profitability.

From monitoring cash flow to analyzing customer acquisition costs, and even keeping a close watch on social media engagement, small businesses have plenty of metrics and data points worth looking into. However, not all metrics and data points are created equal – some impact your bottom line more than others.

That said, by turning your attention to the most impactful metrics, you and your team can effectively streamline your operations, boost efficiency, and ultimately, grow your business.

If this is all starting to sound like a little too much – don’t worry. We promise to take things easy (and run you through the “Metrics for Small Biz 101”).

So, are you ready to take a closer look at the data to track for small businesses growth? Let’s dive in!

The importance of tracking key metrics

In the always-evolving world of being a business owner, understanding, analyzing, and utilizing the right data for small businesses doesn’t just “help” – it transforms. 

After all, these numbers aren’t just about “keeping score”, they’re about gaining insights that can ultimately drive informed decision-making, optimize operations, and set the stage for sustainable growth.

Put simply, tracking metrics provides a clear picture of your business’ performance – from financial health to customer satisfaction. Plus, not only does it clarify your current status, but it can also help identify trends, spot potential problems before they escalate, and seize opportunities for improvement. By regularly monitoring relevant data, small business owners can make proactive adjustments rather than reactive ones, ensuring smooth operations and better resource allocation.

How data-driven decisions can impact business success

There’s no denying that data-driven decisions can have a profound impact on business success. 

When you rely on accurate data to guide your choices – and not just intuition or guesswork – you reduce the risk of making costly mistakes with no prior warning.

For example, say you’re planning a new marketing campaign. Before you can go out there and start allocating your budget and throwing money at any and all content creation efforts, it’s important that you first analyze, say,  your customer acquisition costs and customer lifetime value. Otherwise, you might end up overspending without achieving the desired return on investment. 

Similarly, things like monitoring cash flow and financial health enable you to manage expenditures and investments wisely.

Think of it this way: data is like your business’ North Star. By embracing a culture of data-driven decision-making, small businesses can navigate challenges with more tenacity and capitalize on new opportunities, setting themselves up for long-term success.

3 key metrics to track when running a small business

As we mentioned earlier, not all numbers (or metrics) are created equal. And while it’s nice to imagine that you can keep a close watch on everything going on behind the scenes, the reality of being a business owner is that… you probably won’t have time for that.

So, until you can afford to bring someone on board to help you out with metrics and analysis, there are 3 key metrics we believe will be crucial and impactful – and, most importantly, easy – to understand.

Let’s take a closer look at each one.

1. Cash flow 

Let’s start with the biggest piece of data to track for small businesses: cash flow. In short, cash flow refers to any and all of the money that moves in and out of your business over a certain period. 

This takes into account things like:

  • Revenue from sales
  • Operating expenses (rent, utilities, supplies, platforms and tools, etc.)
  • Payroll costs

So, why does cash flow matter? Well, keeping a close eye on your cash flow helps ensure that you have enough funds to cover your expenses, pay your employees, and invest in growth opportunities. Positive cash flow indicates that your business is healthy and capable of sustaining its operations, while negative cash flow can signal potential financial trouble.

All in all, however, cash flow management is important for maintaining the financial health of your business. So whether you’re planning for future investments, managing day-to-day operations, or assessing the overall financial stability of your business, it’s all about understanding and managing the way money comes in and out.

2. Customer acquisition cost (CAC)

No small business can continue to grow or thrive without customers, right? But here’s the thing: customers don’t just come to you for free. There’s a lot of time, effort, and work that goes into acquiring customers – and both of those things (plus all the other goodies) cost money.

That’s where customer acquisition cost (CAC) comes in. CAC is the total expense incurred to acquire a new customer. 

This includes costs related to:

  • Marketing campaigns
  • Sales efforts
  • Advertising spend
  • Promotional events or sponsorships
  • Working with Creators or influencers
  •  And any other expenses involved in attracting and converting customers

Understanding your CAC can help you evaluate the effectiveness of your marketing efforts and ensure that you’re actually spending your resources wisely. That way, by keeping CAC low and finding more efficient ways to attract customers, you can then work toward improving your overall profitability.

3. Revenue

While your cash flow shows the movement of money in and out of your business, revenue refers to the total income generated from the sale of goods or services. It’s, in other words, everything that’s left after subtracting things like returns, discounts, and allowances.

With that in mind, tracking your revenue is especially important. This, because it helps give you a clear picture of your business’s financial performance. Plus, it also lets you identify potential trends and patterns in terms of sales growth and even seasonal fluctuations.

So, by monitoring revenue regularly and consistently, you can start to make informed decisions about pricing, marketing strategies, and product offerings that can eventually boost your profitability.

And what about social media metrics?

You didn’t think we’d forget that, did you?!

Nowadays, social media metrics can be just as important as “traditional” business metrics when it comes to understanding your customers and, of course, your business as a whole. 

After all, social media platforms offer small businesses a powerful way to connect with customers, build brand awareness, and drive sales. However, to make the most out of your social media, it’s also important to track the right data to ensure your strategies are effective and aligned with your business goals.

Here are a few key social media metrics you’ll want to keep an eye on:

  • Engagement: This includes likes, comments, shares, and any other interactions with your content. Typically, a high engagement rate indicates that your audience finds your content valuable.
  • Reach: This metric shows how many unique users have seen your posts. Tracking reach helps you understand how well your content is being distributed.
  • Growth: Monitoring the increase or decrease in your followers can help you gauge the overall interest in your brand. Steady growth usually indicates that your social media strategy is working.
  • Conversions: This metric tracks how many social media interactions lead to desired actions – think making a purchase, signing up for a newsletter, or downloading a resource.

By regularly monitoring these, business owners and their teams can gain valuable insights into the types of content that truly resonate with their audience, how effectively they’re reaching potential customers, and how their social media contributes to overall business success. 

From there, it’s easier to either adjust the marketing strategy so it better aligns with customer preferences, or continue working toward enhancing the areas that are already performing well.

The how-to for analyzing and tracking data

In order to effectively track these key metrics and make informed decisions, it’s important to start from the ground up by implementing a tracking system that’ll help you monitor and analyze data efficiently.

Whether using simple tools and software that can automate the process and provide real-time insights, or going back to basics with a spreadsheet and manual entry, the most important thing is that the system works for you – otherwise, it won’t be sustainable.

And if you do want to get started with streamlining the process, a few options we’ve heard great things about and have used in the past are:

  • Quickbooks, an accounting software for cash flow management
  • Hubspot, a customer relationship management (CRM) system for tracking customer acquisition costs
  • Google Sheets, for basic spreadsheet templates for revenue monitoring
  • Dubsdado, a second CRM-system that also includes tracking cashflow
  • Most social media scheduling tools also have built-in data and analytics tracking for your content!

TL;DR: This is the ​​data to track for small businesses

Whether or not you’re a numbers person, keeping a close eye on your key metrics can eventually help you streamline operations, boost profitability, and make informed decisions – especially if you’re just starting out.

And while tracking data and monitoring metrics isn’t necessarily the most exciting task to some people, it’s still a vital part of your business that you can’t just ignore.

So, if you’re looking for a good place to start in terms of data tracking and analysis, here are three metrics we believe you should already be watching:

Metric #1: Cash flow 
Metric #2: Customer acquisition cost (CAC)
Metric #3: Revenue

Because in between the daily grind and long-term planning, these numbers can eventually lead the charge when it comes to accessing future growth opportunities, improving efficiency, and achieving long-term success.

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