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Five Business Metrics to Keep Eyes On

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Image: Amauta Foundation

Every successful business runs on data and metrics – key performance indicators that are the result of thorough analysis of the numbers generated by your business.

Tracking some of these indicators can be a sure way to assess how your business is doing. Here are five of the most basic business metrics to keep your eyes on.

1. Sales Revenue

The revenue from selling your product, excluding the value of damaged and returned goods that can’t be sold. There are many factors that could affect the sales revenue of a company. Nevertheless, the revenue from sales every month, can be a good and quick indicator of how your business is performing.

2. Year to date Sales growth

Closely related to sales revenue, the rate of increase of sales over the year, and indeed over the past years, can be another indicator of how well your business is doing. Rising sales growth, or at least a side trend, over the years is a sign of healthy business.

3. Customer acquisition cost

This is the cost incurred in acquiring new customers. It is determined by dividing the cost of customer acquisition efforts like marketing and advertising, by the number of new customers that you added within a time frame.

4. Productivity

Measuring staff productivity is also quite important. High staff productivity is good for growth. On the other hand, staff discontent can hamper growth or even result in some far-reaching damage to your brand.

Simple productivity assessments can be developed for facets of your business by dividing results by staff strength or number of hours worked etc.

5. Gross margin

Gross margin is the difference between your selling price and the cost of producing or buying your products to sell, expressed as a percentage of your selling price. Put simply, it is your simple profit (selling price minus cost price and labour) stacked up as a percentage of your selling price.

Gross margin gives a snapshot of production costs against revenue. A small margin means little left to cover other operating costs.

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