"What metrics should I follow as a small business owner"

A lot of people are talking KPI, OKR, and related nowadays.

Here is the framework I use to figure this and some examples I have used over the last few months.

There are endless possibilities to choose from here, and each has merit.

On top of this, you'll hear from countless people how this one metric boosted sales or that one focus changed everything.

This doesn't mean it should be your metric.

Your business a unique blend of:

* Your value proposition
* Your culture
* Your systems to deliver that value prop
* Other factors (geography, industry, regulation, etc)

Your focus should be unique too.

Metrics are monitors, not the focus.

You build metrics to help monitor a focus.

ex. Profit Margin to Industry is a measure of how well you are situation relative to competitors and the market.

You are not raising PM/Ind; you're increasing your competitive advantage

So assuming you are certain areas to focus on, understand that you shouldn't be using metrics as the end goal, where do you start?

Here is a good place.

* Results
* Activities / Resources
* Effeciency

Results are lagging metrics that show you if what you are doing is working, and if so, how well.

Sales in USD, customers served, foot traffic, likes, New customer additions, etc.

These are the results.

They are usually best visualized as trends or line graphs

Activities / Resources: These are the key things your company uses to generate sales. These are the most expensive or spacious and can stop your growth.

Resc: Warehouse space, # of machines, employees, tables in a restaurant, time

Act: Quotes, calls, emails, leads, deliveries

Efficiency is your most important results divided by your most restrictive activities and resources.

This helps you see how well your company is using its key resources AND

shows you where you should focus to improve.

You could make a fortune taking your small business through this process quarterly:
1. define focus
2. set appropriate metrics
3. find bottlenecks in efficiency
4. Problem solve
5. Implement systematized solution
6. Repeat.

This is basically theory of constraints with metrics

Some Examples:
1. Gross Margin / Shipment (helps me see GM in terms of both warehouse and labor)
2. Revenue per sales person
3. GM per division - which are running best operations, which can improve
4. Sales per vendor - who are my best, where can I grow
6. Margin / day / machine