/what-should-small-business-owners-be-measuring-and-how/ What Should Small Business Owners Be Measuring and How? - Business consulting and public speaking | Paul Samakow

As a small business owner, you may feel like analytics and tracking are reserved for the bigwigs of the industry. If you’re not performing at high levels, it can seem unnecessary to really monitor the data related to your business. Instead, you may only look at your profit or loss to determine whether or not you’re really meeting your goals.

But with 8 out of 10 entrepreneurs closing down their businesses after just 18 months, only measuring your profit and loss may not be enough to keep your business afloat. You’ll need to consider some other metrics to get a real idea for whether or not your business is succeeding.

What Metrics Should You Be Monitoring?

If you’re only measuring metrics in one area, you’ll never know if another part of your business is failing. By the time you realize that you have a problem, it may be too late to make any changes.

To give you a good basic picture of how your business is doing, let’s take a look at the following business necessities.


Your marketing metrics will give you a good idea of how you’re attracting customers or clients. In order to move your business forward, you need to have a consistent stream of new clients coming in. Additionally, you want clients or customers who have purchased from you before to return.

Marketing is an ever-changing art. The key is to test what you are doing, track the results, and make changes based on the results. Take for example newspaper ads. Run two ads with different headlines. See which attracts more, then kick the lesser performing ad and create and run another. Analyze, kick, create again. Through this process a truly effective ad will be created. When you have a great headline, begin to tweak the word usage in the ad content, the layout of the ad, the font size, the order of the content, etc. The example offers the seemingly endless prospect of recreating the ad and testing. Through that process, better and better results can be obtained.


The number of transactions completed should ideally be increasing month by month. Sales is tied into marketing, and like marketing, testing is vital. For a retail business, concepts even as simple as the placement of goods in different locations can mean the difference in sales. The lesson is the same as in marketing. Every sales decision must be tested, massaged, re-tested, etc. to provide the best possible result.


The production of your products and services is just as important as how you’re selling your products or services. If you’re unable to meet the demand of your customers, your business may fall behind. Without quality standards, customers can become unhappy with what you’re offering.

Workforce turnover is one area you can monitor to see how well your production is doing. You want dedicated employees who can’t wait to get to work. These people will assure your product or services are available to those wanting them. It is difficult, if not impossible, to produce if employees are not doing their jobs. Keeping up with inventory, staying on top of shipments and delivery schedules, focusing on quantity and quality are a few of the jobs in the do-to list of employees.

As the owner, management and decision making about production, as implemented by employees, is vital. The reporting of and the analysis of all of the variables is what drives decisions about production.

Business Expense

When you’re consistently spending more money than you’re making, it is a recipe for disaster. To see how well your business is doing, keep track of every expense and task a trusted employee to provide summary reports on a consistent two or four week schedule. Learn about comparative pricing on everything and allow for changing suppliers, or conversations with existing suppliers such as “xyz company is lower on this considerably, and I’d like to stay with you but…” Check out the margins for your products sold. How much does it cost you to make a product and how much are you selling it for? Are you making enough with each sale to keep your company running?

You’ll also want to take a look at your budget and your expenses. Are you spending outside of your means? While you want to have some business expenses, you also need a positive amount of cash flow if you want your business to succeed.

Each small business will have its own set of metrics to measure. Use these recommendations as a starting point, but find the data that helps you better understand your business and your audience. When you properly measure the right areas you can account for problems or issues before they ever appear.