5 key indicators business owners should monitor

Key indicators are crucial as it allows business owners to make timely, well-informed decisions in response to changing conditions. Surprisingly, many business owners look at financial reports only at year-end or even a few months later when financial statements become available.  Having key indicators in place and monitoring them allows to make well informed decisions at the right time. Getting into the habit of reviewing financial results at least on a monthly basis and conducting more thorough analyses every quarter will avoid putting your business at risk. 

Growth – is the business growing year over year? Are your sales increasing?

Profitability – Do you know the industry’s benchmark? Is your business making enough profit compared to similar businesses? Do you know which revenue streams are the most profitable and where you should focus your time?

Liquidity – Is the business able to meet short- and long-term obligations? Do you have a cash flow plan in place? 

Leverage – Is the business taking advantage of financing to operate and grow? 

Activity – Are the assets of the company managed effectively? 

Monitoring these key indicators while projecting and reviewing cash flow is important, even if the business is generating unexpected circumstances can deteriorate the business’ cash flow.