Is Your Business Healthy? 8 Numbers to Track Vigilantly

Is Your Business Healthy? 8 Numbers to Track Vigilantly
To make sure things are chugging along nicely and not slipping into problem territory, here are eight metrics to keep a hawk’s eye on all year long.
by Square Jan 13, 2017 — 2 min read
Is Your Business Healthy? 8 Numbers to Track Vigilantly

Analyzing your business’s performance is one of the best ways to determine what growth opportunities exist within your business. To make sure you know what’s working and what’s not — and get you thinking about what might — here are eight numbers to keep a hawk’s eye on.

1. Revenue

With Square Analytics, you can pull sales data by creating POS reports by day, week, month, and year. Your month-over-month reports give you a solid indication as to how business is trending. And aside from seasonal dips, you obviously want to see that number ticking up.

But you need to look at your sales in context, too. This is why generating a profit-and-loss statement (P&L) every month is also important. You don’t have to see a huge spike in profitability, but even a small, steady, month-over-month percentage increase in profitability is a positive sign that you’re on the right track.

2. Expenses

You want your expenses to stay flat. If your business is in the midst of taking off, your expenses may as well, but in general, you want that increase to correlate to your increase in revenue. That means if your revenue is increasing 10 percent month over month, your expenses should ideally increase no more than 10 percent during that time frame as well.

3. Cash flow

Even if you’re investing heavily, you need to have a healthy cash flow. This is paramount should the unexpected happen — say, if a client doesn’t pay on time, or if you need to replace a critical piece of equipment.

The optimal size of your safety net depends on the volatility of your business and industry, but generally speaking, your cash reserve should equal at least a couple of your financial obligations. If you’re having cash flow issues, Square instant and scheduled transfer can help.

4. New versus returning customers

Businesses can fall into the trap of believing acquiring new customers is what’s key. But while it is important to make sure you’re bringing in fresh people, it’s your repeat customers who are your bread and butter.

A study by Bain & Company found that when customers return, they spend roughly 67 percent more than first-time customers. Watch the percentage of returning customers you have each month closely in your Square Dashboard. A great way to increase your chances of having repeat customers is to stay in contact with them with an email marketing service or with a loyalty program.

5. Sales reports by location

Make sure you’re keeping a close eye on all your storefronts. In the Square Dashboard app, you can see real-time and historical sales information for each of your locations. This data can help you quickly identify which locations are humming along — and which might need a little TLC.

6. Activity ratios

It’s important to determine whether you’re doing a good job generating revenue from your assets, inventory, and resources. For this, you need to calculate asset turnover, inventory turnover, and your operating expense ratios regularly.

7. SEO rankings

If no one can find you online, you’re going to lose customers to the competition. Your business should show up as the first or second search result when people Google your name. Ideally, you’d also show up on the first results page when people Google a related search term (“best boutiques in Portland,” for example).

There are a number of things you can do to improve your business’ SEO ranking, including consistently updating your site with fresh, relevant, keyword-rich content and making sure everything is optimized for mobile. For an added push, it may also be worth hiring a contract SEO consultant to help get things off the ground.

8. Your social media engagement

Consistent likes, comments, and shares on your social media posts mean that people are interested in your business and what you’re up to. Crickets, on the other hand, mean they’re not. If your engagement is lackluster, that’s a sign that you need to start doing more to get on the radar. Up your social media game, yes (some tips here), but also explore new marketing opportunities.

The Bottom Line is brought to you by a global team of collaborators who believe that anyone should be able to participate and thrive in the economy.


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