Why KPIs
Statutory accounts tell you what happened a year ago. KPIs tell you what's happening this month.
The 12 we recommend
Financial
- Gross margin % — sales less direct costs / sales
- Net margin % — net profit / sales
- Cash balance — actual bank position + headroom
- Burn rate — monthly cash outflow
- Runway — cash / burn rate
Operational
- MRR / ARR (for subscriptions) — monthly/annual recurring revenue
- Customer acquisition cost (CAC) — marketing + sales spend / new customers
- Customer lifetime value (LTV) — average revenue per customer × gross margin × retention years
- Average sale value
- Conversion rate — leads → customers
Working capital
- Days Sales Outstanding (DSO) — debtors / sales × 365
- Days Payable Outstanding (DPO) — creditors / cost of sales × 365
How to report
A one-page dashboard, refreshed monthly, comparing:
- This month
- Last month
- Same month last year
- Year-to-date vs budget
Tools that automate this: Fathom, Spotlight Reporting, Syft, Float.
What to do with the numbers
- Review with one trusted advisor monthly (your accountant, a non-exec, a peer group)
- Pick one KPI per quarter to actively improve
- Document the decisions made — not just the numbers reviewed
Ernest & Co Premium clients get a quarterly KPI pack as standard.