What Business Metrics Should You Track Monthly

You've heard it before: "What gets measured gets managed."

But nobody told you WHAT to measure.

So you track everything. Page views, bounce rate, email opens, social followers, conversion rate, CAC, LTV, NPS, MRR, ARR...

By the end, you're drowning in data and starving for insight.

Here's the truth: Most businesses only need to track 5-7 metrics monthly.

The right ones.

The Problem with Tracking Everything

Analysis Paralysis

More metrics = more confusion. When everything is important, nothing is.

Wasted Time

Pulling data from 10 sources takes hours. Hours you should spend on actual work.

Missed Signals

Noise drowns out the signal. The important metric gets lost in a sea of numbers.

No Action

You track 50 metrics but act on zero. What's the point?

The Core Monthly Metrics (Every Business)

These 5 metrics matter for almost every business:

1. Revenue

What: Total money coming in

Why it matters: The ultimate measure of business health

Track:

• Total revenue
• vs. last month (MoM growth)
• vs. same month last year (YoY growth)
• vs. goal/target

Warning signs:

• Negative MoM growth for 2+ months
• Declining YoY despite growing market
• Missing targets consistently

2. Profit Margin

What: Revenue minus costs, as a percentage

Formula: (Revenue - Costs) / Revenue × 100

Why it matters: Revenue means nothing if you're losing money

Track:

• Gross margin (revenue - direct costs)
• Net margin (revenue - all costs)
• Trend over time

Warning signs:

• Margins shrinking while revenue grows
• Below industry benchmarks
• Costs growing faster than revenue

3. Customer Count

What: How many customers you have

Why it matters: Revenue comes from customers. More customers (usually) = more revenue.

Track:

• Total active customers
• New customers this month
• Lost customers (churn)
• Net change

Warning signs:

• Losing more than you're gaining
• New customer acquisition slowing
• High churn rate

4. Average Transaction Value

What: Revenue divided by number of transactions

Formula: Total Revenue / Number of Orders

Why it matters: Growing this = growing revenue without needing more customers

Track:

• Current average
• vs. last month
• vs. last year
• By product/service category

Warning signs:

• Declining over time
• Below industry average
• Dropping after price changes

5. Cash Position

What: Money in the bank

Why it matters: Profit is theory. Cash is reality. Businesses die from cash problems, not profit problems.

Track:

• Current cash balance
• Cash burn rate (if spending > earning)
• Months of runway
• Accounts receivable aging

Warning signs:

• Runway under 6 months
• Cash declining each month
• Receivables getting older

Additional Metrics by Business Type

Ecommerce

Add these:

• Conversion rate: Visitors → Buyers
• Cart abandonment rate: Started checkout but didn't finish
• Return rate: Products sent back
• Customer acquisition cost (CAC): Marketing spend ÷ new customers

SaaS / Subscription

Add these:

• Monthly Recurring Revenue (MRR): Predictable monthly income
• Churn rate: Customers canceling
• Customer Lifetime Value (LTV): Total revenue per customer
• LTV:CAC ratio: Should be 3:1 or higher

Service Business

Add these:

• Utilization rate: Billable hours ÷ available hours
• Project profitability: Revenue - costs per project
• Pipeline value: Potential revenue in proposals
• Close rate: Proposals won ÷ proposals sent

Retail

Add these:

• Foot traffic: Visitors to store
• Sales per square foot: Revenue efficiency
• Inventory turnover: How fast stock sells
• Sell-through rate: Units sold ÷ units received

How to Set Up Monthly Tracking

Step 1: Choose Your Metrics

Pick 5-7 total:

• 5 core metrics (everyone)
• 2-3 business-specific metrics

Don't add more. Resist the temptation.

Step 2: Define Each Clearly

For every metric:

• Exact formula
• Data source
• Who calculates
• When it's due

No ambiguity. Same calculation every month.

Step 3: Set Baselines

Before tracking:

• What's the current value?
• What's the industry average?
• What's your target?

You need comparison to make numbers meaningful.

Step 4: Create a Simple Dashboard

One page with:

• Current value
• Change from last period
• Trend (3-6 months)
• Status (on track / at risk)

Step 5: Schedule Monthly Review

Block 30-60 minutes each month:

• Review all metrics
• Identify concerns
• Decide on actions
• Document insights

Monthly Metrics Review Template

The One-Page View

Period: December 2024

Revenue

• This month: $52,000
• vs. last month: +8.3%
• vs. last year: +26.8%
• Status: On Track

Profit Margin

• Gross margin: 42%
• Net margin: 18%
• Trend: Stable
• Status: On Track

Customers

• Total active: 340
• New this month: 45
• Churned: 12
• Net change: +33
• Status: On Track

Average Order Value

• Current: $72
• vs. last month: +6%
• Trend: Growing
• Status: On Track

Cash Position

• Current balance: $84,000
• Burn rate: N/A (profitable)
• Runway: Unlimited
• Status: Healthy

Key Insights:

1. Strong month driven by holiday sales
2. New customer acquisition up 20%
3. AOV increase from bundle promotion

Actions for Next Month:

1. Continue bundle promotion
2. Plan for January slowdown
3. Review marketing spend efficiency

Common Metric Mistakes

Mistake 1: Vanity Metrics

Vanity: Social followers, page views, app downloads Better: Revenue from social, conversion rate, active users

Vanity metrics feel good but don't drive decisions.

Mistake 2: Lagging Only

Revenue is a lagging indicator — it tells you what happened.

Add leading indicators — things that predict future revenue:

• Pipeline value
• Website traffic
• Trial signups
• Proposal count

Mistake 3: No Comparison

"Revenue was $50,000" tells you nothing.

"Revenue was $50,000, up 12% MoM, down 5% YoY, 10% below target" tells a story.

Mistake 4: Ignoring Trends

One month doesn't matter. Three months is a pattern.

Always look at trends, not just snapshots.

Mistake 5: Tracking Without Action

If a metric doesn't change behavior, why track it?

Every metric should have a response:

• If X goes above Y, we do Z
• If X goes below Y, we investigate

Making Monthly Tracking Easy

The Manual Approach

1. Pull data from each source
2. Enter into spreadsheet
3. Calculate changes
4. Create charts
5. Write summary

Time: 2-4 hours monthly

The Automated Approach

1. Export data (sales, expenses, customers)
2. Upload to analysis tool
3. Review auto-calculated metrics
4. Focus on insights and actions

Time: 30-60 minutes monthly

Hybrid Approach

• Automate the calculations
• Manually add context and commentary
• Use templates for consistency
• Spend time on thinking, not math

Building the Habit

Week 1 of Each Month

• Day 1-2: Collect all data
• Day 3: Run analysis
• Day 4: Review and interpret
• Day 5: Share with team/stakeholders

Monthly Rhythm

Make it a ritual:

• Same time each month
• Same process
• Same format
• Same distribution list

Consistency beats perfection.

Quarterly Deep Dive

Once per quarter:

• Review metric selection (still relevant?)
• Update targets
• Analyze longer trends
• Strategic planning

Key Takeaways

1. Less is more — Track 5-7 metrics, not 50
2. Revenue is not enough — Include profit, customers, and cash
3. Compare everything — Numbers without context mean nothing
4. Trends over snapshots — One month is noise, three months is signal
5. Action is the point — If you won't act on it, don't track it
6. Automate the math — Spend your time on thinking

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