Caption: Every successful business decision begins by measuring what matters.
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Is a number the same thing as a metric?
No — a metric is a number you track on purpose because it tells you something useful; a number on its own doesn’t.
This is worth getting straight from the start, since the two words get used most of the time interchangeably, and you may have also heard the term “KPI” (short for Key Performance Indicator) — that’s just a fancier name for the same idea.
- A number is just any figure. Your age, a phone number, how many steps you walked today — all numbers, but none of them mean anything about your money or your business.
- A metric (or KPI) is a number you track on purpose because it tells you something useful.
So every metric is a number, but not every number is a metric. The test is simple: does this number tell me something I need to know? If yes, it’s a metric. If it’s just a random figure, it’s not.
You’re already using metrics — you just never called them that
Yes — if you’ve ever paid attention to your paycheck, your bills, or your savings, you’ve already been tracking metrics, every single day:
- Income — how much came in from your paycheck
- Expenses — how much went out for bills, groceries, rent
- Savings — what was left over that you set aside
- Sales tax — what got added every time you bought something
- Income tax — what got taken out of your paycheck before you ever saw it
Every one of those is a metric, by the definition above — a number you pay attention to because it tells you something you need to know. You’ve been doing this for years without ever calling it “tracking metrics.”
Now relate that to your business
A business asks you to track the same five things — income, expenses, savings, and taxes — just for the business instead of yourself.
- Income: instead of a paycheck, it’s what customers pay you.
- Expenses: instead of personal bills, it’s what it costs to run the business.
- Savings: instead of your personal savings account, it’s what’s left over after the business pays its expenses — its profit.
- Sales tax: instead of just paying it as a customer, you now collect it from your customers and pass it along.
- Income tax: instead of it being taken out automatically, you now have to report what the business made yourself.
That’s the whole shift. Same five metrics you already track in your personal life — just wearing a business hat instead of a personal one.
How do you actually track these?
No special tool is required — a notebook or spreadsheet is enough. This is really just basic small business bookkeeping: writing down what came in, what went out, and what you collected in sales tax.
You don’t need anything digital to start. A notebook or a plain piece of paper works fine.
Paper will absolutely work. But as your business grows, keeping it all on paper starts to get cumbersome — more sales, more entries, more pages to flip through to find what you are looking for. That’s not a sign paper was the wrong choice; it’s just a sign you’ve outgrown it. When that happens, moving to a simple spreadsheet (Google Sheets or Excel) keeps the same information, just easier to search and add to. Eventually, you’ll graduate to accounting software.
The point either way: start simple. Paper now, something more organized later, only once you actually need it.
Tax rules — especially for sales tax — vary by state, locale, and by business type, so it’s worth checking your own state’s requirements. The U.S. Small Business Administration’s guide to paying taxes is a solid, free starting point.
Tracking customers: new vs. returning
Yes — customers are a metric too. Whether someone is new or returning tells you where your revenue is actually coming from, since customers are what drive sales, and sales are what drive revenue.
Tracking this is simple: keep a running list of customer names. When someone new pays you, add them to the list. Next time they come in, check the list — already on it, that’s a returning customer; not on it, that’s a new one. Paper works fine for this at first, the same as with your money metrics — it just gets harder to manage as your customer list grows, which is a sign of growth, not a problem.
The goal of a business is to grow
Once the money and customer metrics are in place, there’s one more thing every business is naturally trying to do: grow.
Growth is its own goal, separate from just keeping the lights on — and like everything else so far, growth has its own metrics too. Not because growth is a different kind of business, but because “are we growing?” is its own question, and answering it honestly takes its own numbers.
Ways you grow — and the metrics that go with them
Naturally, the goal is to grow — and growth means increasing sales, which means increasing customers, both new and returning. There are a few different ways to do that, and each comes with its own metric worth tracking:
- Referrals — customers who come to you because someone else told them about you. Worth tracking on its own, since it tells you how much of your growth is coming from word of mouth.
- Email — a tool for reaching customers you already have, letting them know about upcoming events or special sales so they come back. Worth tracking things like how many people you’re emailing and how many actually respond or buy.
- Online presence — a website or social media, which is about being found by people who don’t know you yet.
Each is a different path, and they serve different purposes: referrals and email work on people who already know you; online presence is about reaching people who don’t. All three feed the same goal — more customers, more sales, more revenue.
Does “online presence” fit into all this?
Not yet, and that’s fine — online presence is a separate layer that only matters once you actually have a website or social media.
An online presence — a website or social media — is a new layer, separate from the money metrics above. It comes with its own set of metrics: things like how many people visited your website, or how many likes and shares a post got. (Some of those — like likes and shares — are sometimes called “vanity metrics.” We cover what that means, and why it matters, in [a follow-up post].)
Right now, you don’t have a website or social media, so none of that applies yet — and none of it is required to run your business or track income, expenses, and taxes correctly. Once you do add a website or a social media presence, those numbers simply become new metrics to watch, the same way income and expenses already are: numbers worth tracking on purpose because they tell you something.
Metrics come in layers
Yes — metrics aren’t one flat idea. They stack in layers, and each layer answers a different question:
- Layer 1 — Money: income, expenses, savings, taxes. Is the business financially sound?
- Layer 2 — Customers: new vs. returning. Where is the money actually coming from?
- Layer 3 — Growth: referrals, email, online presence. Is the business getting bigger?
None of these layers replace each other. They stack — each one answers something the layer before it couldn’t.
Why this feels complicated (and why it isn’t, really)
It’s a lot, but it’s not hard. Every piece of it, taken one at a time, is something you already know how to do: watching money in and out, noticing who’s a repeat customer, knowing where a sale came from. None of it requires special skill.
The trick is not trying to hold all of it at once. Take it one layer at a time, one small habit at a time — write down a sale, jot down a name, note where a customer heard about you. Do that consistently, and the “lot” turns out to be very manageable pieces, handled one bite at a time.
The whole idea, in one paragraph
You already manage income, expenses, savings, and taxes in your own personal life — a business just asks you to do the same five things, but for the business instead of yourself. A metric is simply a number you deliberately track because it tells you something you need to know — not just any number that happens to show up. Metrics come in layers: money first, then customers, then growth — referrals, email, and online presence — each answering a different question, none replacing the others. It’s a lot when you look at it all at once, but none of it is hard on its own. Taken one small piece at a time — a sale written down, a name added to a list, a note on where a customer heard about you — it’s entirely manageable. Online presence, when you’re ready for one, is simply the newest layer, added on top of everything you already know how to do.
What’s next
Once you’re comfortable tracking your metrics, the natural next question is what to actually do with them. We will explore that in the next article, which introduces analytics. It’s different from a metric in a way worth understanding
If you have any questions or are just having trouble grasping the concept, send me a message or schedule a call.
Note: this article is part of our Business Metrics & Analytics series. Each article stands on its own, but together they provide a step-by-step guide to understanding how measurements can help you make better business decisions. Continue to the next article, or return to the beginning of the series at any time.
Next Article is Analytics
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