We’ve all seen the articles and LinkedIn posts about tracking 47 different metrics in your business, and how they’re all equally important if you want to have a successful venture.

The dashboards with colour-coded graphs showing your customer acquisition cost per channel per month, per week and per day; your employee utilisation rate by project type; your weekly coffee consumption; your daily Slack message average response time. It’s exhausting. And for most small businesses, it’s completely over the top.

If you’re running a business with under 20 people, you don’t need enterprise-level analytics. You need to know a handful of things, really well, that tell you whether your business is healthy or not. That’s it.

Here are the KPIs that you’ll actually want to look at when trying to run a profitable, sustainable small business.

Cash in the bank

I’m starting here because it’s the most important number in your business, yet is somehow the one people pay the least attention to.

How much actual cash do you have available right now? Not your turnover. Not your profit on paper. Not what clients owe you. Actual money in the bank. And not only that, but how much will you have in a month? Three months? Six months?

This is the number that tells you if you can make payroll, whether you can afford that new hire, if you’ve got enough runway to weather a quiet period. Everything else is theoretical until the cash is actually in your account.

Check this weekly using a cashflow forecast – there’s lots of software, or use a good ol’ fashioned spreadsheet. Know what your baseline is (the minimum amount you need to keep the business running) and if you’re getting close to it, that’s your alarm bell.

Gross profit margin

This is the difference between what you charge your customer, and what it costs you to deliver the work or product, expressed as a percentage.

If you’re a service business, this usually means your revenue minus the direct costs of delivering that service (staff time, subcontractors, materials). If you sell products, it’s your revenue minus the cost of goods sold.

Why does this matter? Because it tells you if your business model actually works. You can have a million pounds in revenue, but if your gross profit margin is 10%, you’ve got a problem. There’s barely anything left to cover overheads, let alone pay yourself or reinvest.

A healthy gross profit margin for most service businesses sits somewhere between 50-70%. If yours is lower, you’re either undercharging, overstaffing, or your operations are inefficient. Sometimes all three.

Average debtor days

This is how long it takes, on average, for your clients to actually pay you.

You calculate it by taking your accounts receivable (money owed to you) divided by your average daily sales. So if clients owe you £30k and your average daily sales are £1k, your debtor days are 30.

Why does this matter? Because the more money sits in someone else’s bank account, well, the less it sits in yours. You might be profitable on paper, but if your debtor days are 60, 90, or god forbid 120, you’re essentially running a free financing operation for your clients.

Aim for 30 days or less. If you’re regularly sitting above 45-60 days, you need tighter credit control, better payment terms or different clients.

Revenue per employee

If you have a team, this one’s crucial. It’s your total revenue divided by the number of people on your payroll (including you).

This tells you how efficiently you’re using your people. If your revenue per employee is too low, you’re either undercharging, overstaffed, or your team isn’t productive enough.

There’s no universal benchmark because it varies wildly by industry, but as a rough guide: if you’re a service business and your revenue per employee is under £60k-£80k, you’re going to struggle to be profitable once you factor in overheads, taxes and everything else.

It’s also smart to keep track of this so you can spot trends. If this number is dropping over time, that’s a red flag. It usually means you’re hiring faster than you’re growing revenue, which is a very expensive way to run a business.

Operating expenses as a percentage of revenue

This is all your overhead (rent, software, insurance, marketing, anything that’s not directly tied to delivering client work) as a percentage of your revenue. You calculate this by adding up all those expenses, dividing it by your revenue, then multiply by 100. For example, if your operating expenses are £50k and revenue is £150k:

(£50k ÷ £200k) x 100 = 25%

For most small businesses, you want this sitting somewhere between 20-35%. If it’s creeping above 40%, your overheads are eating too much of your revenue and you’re leaving yourself very little margin for error.

It’s very common to see businesses that are bringing in decent revenue, but when you dig into the numbers they’re spending 50-60% on overheads. Fancy offices, expensive software they barely use, subscriptions nobody remembers signing up for, too many employees. Death by a thousand cuts.

Audit your expenses every quarter. Be ruthless. If something isn’t directly contributing to revenue or saving you significant time, get rid of it.

Profit (actual profit, not just on paper)

I’m talking about what’s left after you’ve paid all your costs, all your overheads, all your tax, and paid yourself a reasonable salary.

This is the number that tells you if your business is actually viable or just a very stressful job. If you’re working 60-hour weeks, barely paying yourself, and there’s nothing left at the end of the year, you probably need to do something differently.

Aim for at least 10-15% net profit. That gives you a buffer for reinvestment, for quiet months, for the inevitable surprises.

What about everything else?

Notice what’s not on this list: social media engagement rates, website traffic, email open rates, customer satisfaction scores.

I’m not saying those things don’t matter – they definitely do. But they’re not KPIs that will tell you if your business is financially healthy. They’re interesting, and they can help you make decisions about actions going forward (marketing strategy, ideal clients, etc), but they won’t tell you if you can pay your team or whether you’re profitable.

The businesses that survive and thrive are the ones that obsess over the fundamentals: cash, margins, collections, efficiency, profit. Everything else is secondary until you’ve got those sorted.