Every business wants to grow, but without knowing where you stand, it’s hard to move forward. Knowing the key metrics to track business performance is like having a GPS for your business: it shows you where you are, where you’re headed, and what adjustments you need to make.

Despite the variety of metrics available to track, the challenge lies in identifying the ones that truly matter. So, which key metrics actually make an impact on your business growth?

1. Customer Acquisition Cost (CAC)

This is the total expense you incur to win a customer. It encompasses all marketing, advertising, sales, and operational costs tied directly to bringing in new customers. Tracking CAC requires monitoring all expenses related to acquiring customers.

How to Calculate CAC:

    Identify Marketing and Sales Expenses: Include costs such as Advertising spend, Salaries of marketing and sales staff, Software or tools for marketing automation, Agency fees (if outsourcing marketing).

    Count the Number of New Customers Acquired:Determine the total number of new customers brought in during the same period. This data can come from your CRM, sales reports, or customer management software.

    Calculate:Add up marketing and sales expenses (ads, salaries, tools) over a period. Divide by the number of customers gained in that period.

    Example: 10,000 spent ÷ 50 new customers = 200 CAC.

Tela Tips:CAC allows you to forecast how much it will cost to scale your business and acquire more customers as you grow. However, if you’re spending more to acquire a customer that spends less, you’re losing money.

2. Cash Flow

This is one of the most overlooked metrics in a business. Managing cash flow well reduces the need to rely on credit or loans for everyday expenses. It enables you to invest in new equipment, hire staff, or expand operations. Without sufficient cash, even profitable businesses can struggle.

How to Track Cash Flow:

    Use a Cash Flow Statement:A cash flowcash flow statement tracks inflows and outflows over a specific period. It helps you identify trends, patterns, and potential problems. Break it down into: Cash Inflows: Revenue from sales, loans, and investments. Cash Outflows: Expenses like rent, salaries, and supplier payments.

    Monitor Bank Transactions: Regularly reconcile your bank accounts to ensure all transactions are accounted for. Manually creating a spreadsheet to record inflows and outflows can be helpful.

    Use Accounting Tools: Tela tools can automatically generate cash flow reports and help you monitor trends. It provides detailed financial reports on your income and expenses, allowing you to see a summary of all your cash flow in one dashboard.

3. Profit Margin

“Profit is not an event. Profit is a habit. You don’t ‘get’ profit; you habitually take profit.” – Mike Michalowicz, author of Profit First, emphasizes the importance of profit in business.

Profit margins are a critical financial metric that reveals how efficiently your business converts revenue into profit. Unlike revenue, which only measures total income, profit margins focus on the money left after covering various costs, providing a clearer picture of financial health.

Types of Profit Margins to Track:

    Gross Profit MarginThis reflects the percentage of revenue that remains after subtracting the cost of goods sold (COGS). It focuses on the profitability of core operations, excluding overhead, taxes, and other non-direct expenses.

    How to Calculate:

    Gross Profit Margin = [(Revenue - COGS) / Revenue] × 100

    Example: Revenue: $50,000 COGS: $20,000 Gross Profit Margin = [(50,000 - 20,000) / 50,000] × 100 = 60%

    Tela Tips: Gross profit margin helps you understand how efficiently you’re producing goods or delivering services. A high margin indicates strong cost control or pricing power, while a low margin may signal rising production costs or underpricing.

    Net Profit Margin Net profit margin measures the percentage of revenue left after deducting all expenses, including operating costs, taxes, and interest. This gives the most comprehensive view of profitability.

    How to Calculate:

    Net Profit Margin = [(Total Revenue - Total Expenses) / Revenue] × 100

    Example: Total Revenue: $50,000 Total Expenses: $45,000 Net Profit Margin = [(50,000 - 45,000) / 50,000] × 100 = 10%

Tela Tips:Net profit margin shows the overall efficiency of the business. It tells you how much of each money earned becomes profit, which is crucial for your business success.

4. Customer Churn Rate

As a business owner, understanding customer churn rate is critical, especially if you aim to maintain long-term customer relationships and steady growth. Churn rate measures the percentage of customers who stop using your products or services over a specific period. It directly impacts your revenue and growth.

How to Track Churn Rate:

    Decide whether you’re calculating churn on a monthly, quarterly, or annual basis.

    Use data to determine the number of customers you had at the start of the period.

    Identify the number of customers who left during that period.

How to Calculate:

    Churn Rate = (Number of Lost Customers / Total Customers at Start of Period) × 100

    Example: Total customers at the start of the month: 500 Customers lost during the month: 10 Churn Rate = (10 / 500) × 100 = 2% monthly churn

Tela Tips:Use online tools to calculate churn rates and gain insights into customer behavior. Tela CRM tools can automate tracking and analysis, helping you understand churn dynamics and optimize retention strategies.

5. Employee Engagement Metrics

Employee engagement refers to the emotional commitment and level of enthusiasm employees have toward their work, their team, and the organization they work for. While job satisfaction is about being content with one’s job, engagement is about being emotionally invested and motivated to contribute. Tracking engagement helps pinpoint issues such as poor management, lack of recognition, or insufficient career development opportunities.

How to Measure Employee Engagement:

    Surveys: Conduct regular surveys, such as annual or pulse surveys. Metrics include Employee Net Promoter Score (eNPS) and questions about satisfaction, alignment, and motivation.

    Feedback Mechanisms:Use focus groups, one-on-one meetings, and suggestion boxes.

    Performance Metrics: Track productivity, absenteeism, and turnover rates as indirect indicators of engagement.

    Observation: Managers can observe participation, enthusiasm, and collaboration.

Tela Advantage

Centralize Your Metrics: Say goodbye to scattered spreadsheets. Tela brings all your financial data, sales income, expenses, and CRM systems into one dashboard.

Automate Reporting: Tela’s AI-driven tools let you schedule and automate your workflow providing actionable insights effortlessly.

Focus on Growth: Tela frees up your time to focus on other strategies that scale your business.

Tela Tips:
Reignite Your Passion: Remember Why You Started

You don’t need to track every metric, just the ones that directly impact your business growth. Tela tools simplify the process, turning your financial data into actionable insights. Start with 2–3 metrics, build consistency, and gradually expand.

Remember: Metrics aren’t just numbers. They’re the story of your business. The better you understand that story, the faster you’ll write the next chapter.