Today, we’re diving into the world of metrics and key performance indicators (KPIs).

Don’t worry if these terms sound like jargon from a different planet — we’ll break them down and show you how tracking real data can supercharge your business.

You might think that only big companies like Apple need to deal with and analyze metrics, but this isn’t about big companies vs. small business.

This is about using real data to keep you out of the weeds of guestimates and hoping.

If you’re anything like me, you shy away from numbers.

But the truth is:

Men Lie, Women Lie, our perception lies…NUMBERS DON’T LIE!

To truly graduate from starving artists to thriving businesses we need to embrace numbers and metrics as the truth-telling friend that they are.

Let’s break down what you should be looking at, what it means, and how to use it to make decisions.

So, grab your data hat, and let’s get started!

MRR: Monthly Recurring Revenue — Keeping Your Cash Flow Steady

Monthly Recurring Revenue (MRR) is like having a reliable stream of income flowing into your business each month. It’s not just for big companies; small businesses can benefit from tracking MRR too. It helps you understand the stability and predictability of your cash flow. By monitoring MRR, you can make informed decisions about pricing, subscription-based services, and finding ways to increase recurring revenue. This can give you the quickest feedback about the results of your efforts.

CAC: Customer Acquisition Cost — Making Every Penny Count Customer Acquisition Cost (CAC) is all about understanding how much it costs you to acquire each new customer. As a small business owner, you want to make every penny count. By tracking CAC, you can assess the effectiveness of your marketing and sales efforts. It helps you identify which channels are bringing you the most value and which ones need adjustments. If you’re juggling blogs, social media, and video and see that most of your clients are coming from your lead magnet then you have immediate feedback about where to focus. Monitoring CAC allows you to optimize your spending and focus on strategies that yield the best R.O.I. And that investment may not always be monetary based. Simply understanding the time and effort it takes can give valuable insights on streamlining your sales processes.

LTV: Lifetime Value of a Client — Building Long-Term Relationships

The Lifetime Value of a Client (LTV) is all about nurturing long-term relationships with your customers. Do you know who the easiest person to sell to is? The one that has bought from you before! By understanding the lifespan of your support for clients you can understand the revenue you can expect to generate from a single client throughout their journey with your business. As a small business owner, building loyal and lasting relationships is crucial. By tracking LTV, you can prioritize customer satisfaction, retention, and delivering exceptional value that keeps clients coming back for more.

Renewal Rates and Churn — Keeping Your Customers Engaged

Renewal rates and churn are key metrics for customer retention. Renewal rates measure the percentage of customers who renew their subscriptions or continue using your services. Churn, on the other hand, represents the rate at which customers leave your business. These metrics are especially important for small businesses. If you only look at your sales, but not at refunds- you’re data will be skewed. By monitoring renewal rates and reducing churn, you can identify areas for improvement, enhance your customer experience, and build a loyal customer base that can continue to be served by you for years to come.

Cash Flow — The Lifeblood of Your Small Business

Cash flow is the lifeblood of any business, regardless of its size. It’s simply the money coming in and going out. As a small business owner, keeping a close eye on cash flow is essential. It helps you understand your financial health, pay your bills on time, invest in growth opportunities, and maintain stability. By tracking your cash flow, you can make informed decisions and ensure you have the necessary resources to fuel your business’s success.

Just like finances, you should be checking in on your metrics monthly (and in some cases weekly).

Let them be a guide, not a doomsday report.

The numbers are feedback, not fortune tellers.

Your gut and heart will do best with the support of a brain.

All those pieces together can help lead the way to a successful and sustainable business that is less “fingers crossed” and more “confirmed calm”.