20 Essential Financial Metrics Entrepreneurs Should Regularly Track

Business leaders today are required to juggle a variety of responsibilities in order to ensure the long-term success of their businesses. This can leave them with little bandwidth to effectively focus on matters like driving growth and profitability. Examining financial metrics and data on a regular basis can be an easy way for leaders to stay on top of financial matters as they balance other tasks.

There are a multitude of financial metrics that can showcase how well a business is operating, but it can be difficult to know what to monitor. Below, 20 Forbes Business Council members discuss key financial metrics every entrepreneur should track regularly, as well as why that metric is critical and what it indicates.

1. Sales Data

The one metric an entrepreneur must keep front of mind at all times is sales data. No successful business could function without tracking this closely. Your projected revenue underpins everything you do, from hiring to investment planning. It would be wholly irresponsible not to keep on top of your proposals and commissions, as you would be essentially driving the car blindfolded. – Barrie Brien, STRAT7

2. Cost Per Lead

Track cost per lead regularly. Knowing how much it costs to generate a sales lead with contact details ensures you have an effective sales funnel running 365 days a year. This metric is crucial for growing your business and maximizing its potential. – Dr. Clemen Chiang, Spiking

3. Customer Acquisition Costs

The cost to acquire a customer and the lifetime value of the customer are pivotal metrics for entrepreneurs because they collectively illustrate how efficiently your business acquires and retains customers, directly impacting profitability and sustainability. By carefully analyzing customer acquisition costs against customer lifetime value, businesses can gauge their financial health and operational efficiency. – Aaron Harper, Rolling Suds

4. Customer Lifetime Value

Customer lifetime value (LTV) refers to the total revenue expected from a customer over their entire relationship with the business. This is really important for understanding long-term profitability and customer retention strategies. The goal should be to have a high LTV and low churn rate. – Sneha Lundia, Step2Growth

5. Employee Turnover

Employee turnover is a key metric that can tell you a lot about your company. If you have a hard time holding on to your employees, something is broken somewhere in your operations. The cost of consistently having to recruit new employees shouldn’t be overlooked, and more leaders should invest in fostering a culture that retains great people. – Michael Ghesser, Cleanlogic

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6. Return On Investment

Tracking return on investment is crucial. It measures the efficiency of each dollar invested, helping you understand which areas yield the most profit and which areas are draining resources. By focusing on ROI, you can strategically allocate funds, prioritize projects that boost growth and avoid investments that don’t pay off. – Angela Palo, Pinnacle Financial Services (PFS)

7. Cash Flow

Track the money going in and money out. Cash flow is the singular financial metric that every entrepreneur should regularly track as it is the lifeline for every business. Balancing growth and costs is important for entrepreneurs and understanding the pulse of cash flow is important for present and future growth investments. – Prakash Gurumoorthy, VTEX

8. EBITDA

One key financial metric every entrepreneur should track regularly is EBITDA. A company’s operational profitability should exclude non-operational expenses and non-cash charges. This is crucial because it helps assess the business’s performance and potential for growth, making it easier to determine if the company is on the right track to sell. – Ryan Listerman, Mitchell & Sons Roofing

9. Burn Rate

It’s crucial to track burn rate because it provides insights into how long the company can sustain its operations before it runs out of money. It’s about leaders making informed decisions about their spending and investment and growth strategies. If burn rate is too high, adjustments need to be made to reduce expenses or increase revenue. If it’s too low, it may signal that the company has a runway to pursue additional growth opportunities. – Glenn Mathis, Integris

10. Product Adoption

Entrepreneurs should track product adoption metrics, such as active users over a certain time period. This metric reveals how frequently customers interact with the product and its importance in their daily lives. By analyzing this metric, entrepreneurs can identify ideal customer segments, understand impactful use cases and address engagement issues to prevent churn. – Alison Furneaux, BlueIO | CyberSaint

11. Cost Of Goods Sold

We tend to take the cost of goods sold or COGS as a given cost. As your business grows, reducing COGS becomes a key opportunity to boost profitability. Make sure to regularly renegotiate terms with current suppliers and actively seek new ones who can offer better rates. This strategy will help you shift your volume to more cost-effective partners, optimizing your expenses as you expand. – Shaul Rappaport, Mario Capasa

12. Annual Recurring Revenue

When you start talking to investors, annual recurring revenue, or ARR, will be one of the first things they ask you. On the other hand, it’s also important for you because it tells you how sustainable your business is in the long term. While most think of ARR in terms of subscriptions, anything that can produce annual, measurable and estimated revenue works. – Bojan Čekrlić, CargoX d.o.o.

13. Return On Time

One key financial metric every entrepreneur should track regularly is the return on time (ROT). Time is your most valuable asset. By measuring ROT, you can see which activities yield the highest returns for the time invested. This helps you prioritize tasks that drive growth and profitability, ensuring every minute you spend is aligned with maximizing your business’s financial success. – Paul Getter, The Internet Marketing Nerds

14. Turnover

There are a million reasons why profits go up or down, expenses increase, etc. Turnover is your reach, indicating your market impact. Be obsessed with that, as it’s usually your imprint on the world. – Henry Duckworth, AgriDex

15. Renewal Rates

Renewal rates are the heartbeat of a thriving business. They reveal client satisfaction and loyalty. Prioritize current clients like they’re your only ones. Their referrals are pivotal and often the single greatest form of marketing. High renewal rates mean your clients love your solution and keep coming back, which is the best testament to your business’s success. – Ken Thomas, BOND

16. Return On Assets

Return on assets is a profitability ratio that is measured by dividing net profit by the company’s average assets. ROA indicates how well a company manages available resources and assets to net higher profits. A fast-growing company may be able to shoot for 15% or more. Over 20% is excellent, while anything over 5% is especially good as a company matures. – Stuart Robertson, ShareBuilder 401k

17. Credit Card Processing Fees

Every merchant agreement contains a clause stating that credit card processors can change their fees and rates at any time. Another clause states that the merchant only has 30 days to catch and dispute the new rates or fees. Monitoring business credit cards is one of the easiest ways to reduce the cost of doing business. – Robert Day, weAudit.com

18. Profit Margins

Profit margins are a paramount metric that every entrepreneur should know. This metric guides long-term growth strategies and aids in making smart, quick business decisions that lead to a more agile company. Margins demonstrate a practical measurement of effectiveness for newly implemented tactics and instill the confidence needed to continue taking calculated and profitable risks. – Randy Loveless, Catalyst Coaching and Mentoring

19. The Bottom Line

The bottom line remains a company’s key financial metric. Companies can enjoy a honeymoon period with investors, but surviving long-term requires eventually attaining and maintaining profitability. Revenue is the most basic and essential financial metric, as it measures the success of a business’s core operations. – LaRae Quy, Mental Toughness Center

20. Net Worth

One key financial metric every entrepreneur should track is net worth. This metric helps you understand the financial relationship between you and your business. Focusing on net worth ensures your business supports your life goals and personal financial growth toward independence. Aligning personal and business finances builds real wealth, changing how you approach both life and work. – Dr. Grace Lee, Mastery Insights Inc.