Understanding key performance indicators for your business

The numbers to track to drive business growth

Discover the KPIs that underpin business success and the role of a trusted accountant.

How much do you know about your business performance?

Key performance indicators (KPIs) provide a benchmark for success and offer an instant view of business health. Understanding the numbers also increases financial literacy and helps you ask better questions of trusted advisors like your accountant.

Not sure where to start? There are six business KPIs you should track to ensure your business is built on the right foundations.

#1 Cash flow forecast

What is it?

Provides an estimate of future sales and expenses.

What does it indicate?

Measuring projected income and outgoings reveals the financial health of your business. Positive cash flow means your business is making money.

How is it measured?

Subtract your expected outgoings from your expected income over a monthly, quarterly or annual basis.

Who measures it?

You can run the numbers or get your accountant to do it for you.

What do you compare to track performance?

Map out monthly forecasts over a 12 month period to anticipate peaks and troughs and get a feel for the state of your cash flow.

What’s the industry benchmark/target KPI range?

There is no set benchmark for cash flow forecasting but you should aim for a positive result - else you could run out of money.

Why and how it can impact your business?

Cash flow forecasts identify when your business may have excess cash or fall short. It assists with decision-making, helps in short and long term financial planning and can avert financial disaster for your business.

What to ask your accountant?

Is there a template I can use for forecasting?

Is there a list of income and expenses I can use to check against my own records?

#2 Revenue growth

What is it?

Measures revenue over a period of time expressed as a percentage.

What does it indicate?

Positive revenue growth shows that your business is moving in the right direction.

How is it measured?

Subtract the previous period’s revenue from the current period’s revenue and divide by the previous period’s revenue.

Who measures it?

You can run the numbers or get your accountant to do it for you.

What do you compare to track performance?

Compare revenue from matching timeframes (i.e. compare 2021 revenue to 2022 or March 2021 with March 2022).

What’s the industry benchmark/target KPI range?

Every company is different. Generally a 2-3% growth rate is healthy, with 10% or more a sign of a successful business.

Why and how it can impact your business?

Revenue growth is key to a successful business, allowing entities to bring on more staff, expand product lines and invest in research and development.

What to ask your accountant?

What is an ideal revenue growth rate for my industry?

Where can I cut costs and trim fat to improve my revenue rate and boost my bottom line?

#3 Revenue per client

What is it?

Takes your revenue and measures the average amount generated per client.

What does it indicate?

Increasing this metric makes it easier to generate more revenue from a smaller pool of clients.

How is it measured?

Divide total revenue by the total number of clients.

Who measures it?

You can run the numbers or get your accountant to do it for you.

What do you compare to track performance?

Monitor the rate from month to month and year to year to track growth, stagnation or decline.

What’s the industry benchmark/target KPI range?

There is no set benchmark for revenue per client but you should always aim to grow the rate over time.

Why and how it can impact your business?

Increasing your revenue per client rate will boost your bottom line without the cost of attracting or onboarding new clients. It also drives innovation as your business explores new ways to offer value and increase revenue.

What to ask your accountant?

Is there a standard revenue per client rate for my industry?

How frequently should I be measuring it?

Is there a template report I can use?

A successful business relies on knowing the numbers

Your bank balance can only tell you so much – tracking business KPIs gives you the full picture and highlights opportunity.

Know your business better with expert advice on KPIs.