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When establishing a startup, it can be difficult to know which metrics you should be focusing on. You may be watching and reporting on basic key performance indicators (KPIs) such as your gross profit margin, but are there metrics you’re overlooking? The answer is most likely yes.
Our founder and managing partner, Terry Tateossian, gives her take on the subject as well. You could read her opinion under number 1. Impressions
These eight Young Entrepreneur Council members have learned through experience that not measuring certain metrics could mean missed opportunities for company growth. So review this list of often overlooked KPIs to see if you’re missing any important metrics from your reports.
Impressions have been traditionally underrated. Since conversions are king, most entrepreneurs are less concerned with impressions. However, nothing builds a brand or a loyal customer base better than continuous and consistent impressions of your products, services or reputation. The impact produces a seed customer base that can propel your startup 10 times more. – Terry Tateossian, Socialfix Media
2. Customer Churn Rate
Churn is key. Often, entrepreneurs are so focused on securing new business that they forget how important retention is. Loyal customers are the most powerful vocal brand advocates. They buy repeatedly and they talk about your brand, giving you valuable word-of-mouth marketing. It costs less to retain a customer than it does to attract a new one. Reducing churn should be a top priority. – Jonathan Prichard, MattressInsider.com
3. Return On Time
Return on time (ROT) is an important key performance indicator for entrepreneurs. I can’t tell you how much time I wasted early in my entrepreneurial career simply by focusing on the wrong things. I learned over time that we must hold ourselves accountable for where we spend our precious time. The best way to optimize your time is to identify where you are spending your time and modify to reduce, expand or eliminate where your focus isn’t driving results. – Kristopher Brian Jones, LSEO.com
4. Opportunity Cost
In many cases, business owners are content with any campaigns or initiatives that are ROI-positive. However, the easiest way to slow growth is by investing in slow-moving opportunities. Instead, look to reallocate existing spend toward higher ROI projects so you can accelerate your growth trajectory. – Firas Kittaneh, Amerisleep Mattress
5. Burn Rate
I truly wish that this was not an often overlooked KPI, but it is overlooked and far too often. Costs build up in your business, and if you don’t have a good grasp of it then you will lose a lot of money. It’s not just labor costs that add up if you are not careful, but many subscription costs for tools as well. Always watch the books. – Nicole Munoz, Nicole Munoz Consulting, Inc.
6. Customer Lifetime Value
One of the most valuable key performance indicators your business can track is your customer lifetime value (LTV). This helps you understand how long you are keeping customers and how much they are spending with you. By optimizing the relationship you have with your existing customers so they stay longer and buy more, you can increase your revenue by 50-100% in some cases, without spending a dime on ads or marketing. – Joe Stolte, The Tractionology Group
7. Profit Per Employee
Profit per employee is one massively overlooked KPI. Many small businesses struggle to figure out when to hire more employees or when not to do so. Calculating the profit per employee KPI on a monthly basis (for the first few years) can help you make this decision more easily. – Thomas Griffin, OptinMonster
8. Accounts Receivable Days
The most important key performance indicator in any growing business is accounts receivable (AR) days, which describes how many days on average it takes to receive payment from customers. Your business could be the most profitable player in your industry, but if you don’t get paid for the work, your profit margin doesn’t matter. AR days can be calculated as: Accounts receivable days = (accounts receivable / revenue) x 365. – Steven Knight, Mosaic Home Services Ltd.