3 KPIs Every Ambitious Business Owner Should Track to Drive Performance.

Running a business is about more than just turning a profit; it’s about making informed decisions that drive sustainable growth. The difference between businesses that stagnate and those that scale often comes down to one thing: understanding and leveraging key metrics.

Data isn’t just for the big players—it’s for every business owner who wants to unlock their true potential. By zeroing in on the right Key Performance Indicators (KPIs), you can gain powerful insights, make proactive choices, and stay ahead of the curve.

So, which KPIs should you focus on to measure and enhance your business’s performance? Let’s dive into the 3 top metrics that every ambitious business owner needs to track.

1. Salaries as a Percentage of Revenue: Are you investing wisely in your team?

Your team is the backbone of your business, but payroll can quickly become a heavy cost if not managed carefully. Tracking salaries as a percentage of revenue helps you ensure that you’re investing wisely in talent without overspending.

This metric shows how much of your revenue is going towards paying your staff, helping you answer crucial questions: Are you overextending on salaries, or is there room to grow the team? Are you seeing a return on your investment in people?

Keeping this ratio balanced means you’re scaling your workforce sustainably and ensuring that your business can thrive without straining cash flow. When managed well, this KPI reflects a strategic approach to team building, allowing for growth that aligns with revenue generation.

This metric can vary depending on the industry you operate in, so learn the norm in your industry to benchmark performance.

2. Days Sales Outstanding (DSO): How fast are your customers paying?

Cash flow is the heartbeat of your business. It’s the fuel that keeps everything running smoothly, from paying bills to investing in growth opportunities. Days Sales Outstanding (DSO) measures the average amount of days it takes customers to pay you, directly impacting your cash flow stability. A high DSO means that it’s taking longer for payments to come through, which can lead to cash flow crunches and hinder your business’s ability to operate effectively.

By actively monitoring this KPI, you can identify customers or processes that may be causing delays, allowing you to tighten up payment terms and improve cash flow.

Shortening your DSO not only strengthens financial control but also gives you the flexibility to reinvest in your business. Again, work out the norm in your industry and use this to gauge your performance.

3. Cash in the Bank: How long can your business run without income?

Think of cash in the bank as your business’s runway. This metric tells you how long your business can operate without additional income, providing a clear picture of financial resilience.

A good rule of thumb is to have the equivalent of 6 months overheads in the bank. For instance, if the overheads for your business are £10k, you want to have £60k in the bank.

In times of economic uncertainty or unexpected expenses, having a healthy cash reserve is essential to avoid tough decisions like cutting costs or pausing operations. Tracking this KPI means you’re prepared for the unexpected and gives you a clear sense of when it’s safe to scale or when it might be wise to pull back and recalibrate. Cash reserves empower you to seize new opportunities without compromising your business’s stability. In essence, they’re the safety net that allows for calculated risks and strategic growth.

Turning data into decisions.

While these KPIs might seem like simple numbers, they’re far more than that. Each one tells a story about the health and trajectory of your business. By consistently tracking and analysing these metrics, you’ll gain a deeper understanding of how your business is performing and be able to spot trends before they become problems.

The most successful business owners are those who are proactive, not reactive. Regularly reviewing these KPIs empowers you to make decisions that fuel growth, enhance stability, and keep your business on track.

Drive performance with
data-led financial insights. 🚀

At Ashton McGill, we’re here to help you navigate the world of financial data. We understand that, as a business owner, you’re driven to succeed, and we want to equip you with the insights and tools to make that happen. Our team specialises in helping ambitious businesses like yours translate data into action. Let us help you track the right metrics so you can drive performance and scale with confidence.