Key Financial KPIs Every Small Business Should Track
Every business is drowning in reports and starving for insight. Here are the eight KPIs that answer the questions that actually matter.
Revenue growth (year-over-year)
Compare rolling 12-month revenue this year vs same period last year.
Healthy small business: 10–25% annual growth.
Flat or shrinking: something to investigate.
Gross margin %
(Revenue – COGS) / Revenue.
Trend matters more than absolute number — declining margin signals pricing or cost issues.
Benchmarks vary wildly by industry.
Operating margin %
Operating income / Revenue.
For most small service businesses, healthy is 15–25%.
For product businesses, 8–15%.
Days Sales Outstanding (DSO)
(A/R / Revenue) × 365.
How long customers take to pay.
Under 30 days is excellent; 30–45 typical; over 60 needs immediate attention.
Current ratio
Current assets / current liabilities.
Above 1.5 is comfortable; under 1.0 signals near-term cash pressure.
Cash runway (in months)
Cash balance / monthly cash burn.
3+ months is comfortable; under 1 is dangerous.
Revenue per employee
Total revenue / full-time equivalent employees.
Trending up: productivity improving. Trending down: overstaffing or revenue softness.
Rough benchmarks: professional services $150k–$300k, construction $200k–$400k, retail $100k–$200k.
Customer concentration
% of revenue from top customer, top 3, top 10.
Top customer over 20% = concentration risk.
Top customer over 40% = existential risk if lost.
A quick disclaimer
This article is general information for Montana small business owners, not tax, legal, or accounting advice for your specific situation. Rules change, and how they apply depends on facts we don't know about you. Before acting on anything you read here, talk to a qualified professional. If you're a Montana business owner and want a real conversation about your books, payroll, or tax, that's what Marlow Accounting is here for — call 406-290-1214 or schedule a discovery call.