The 5 KPIs Every Growing Business Should Track (But Often Doesn’t)
KPI’s matter more as you grow
Once your business pushes past a few hundred thousand in revenue, the bank balance alone stops being a reliable guide.
Sales are up, the team is busy, but:
You are not sure which work is actually profitable
Cash feels tight even in good months
Decisions about hiring or investing feel risky and emotional
That is where a simple, focused KPI set comes in. At Wainwright, we work with growing SMEs, giving you insight you can actually use, not just another report.
Below are the 5 KPIs we come back to again and again with clients who want more margin, better cash…and a calmer head.
For each one you will see:
What it actually means
How to calculate it
How often to track it
What to do with the insight
1. Gross profit margin by product, service and client
Benefit: Protects margin and stops you scaling unprofitable work.
What it is
Gross profit margin shows how much profit you make after direct costs of delivery (materials, freelancers, direct labour, shipping, platform costs, etc), before overheads.
Formula
Gross profit % = (Sales – Direct costs) ÷ Sales x 100
The real power comes when you slice this by:
Product or service line
Key clients or segments
Channels (for example, direct vs partner sales)
How often to track
Monthly: As standard, with a simple table and chart in your management pack
Quarterly deep dive: To review pricing, discounts and cost creep
What to look for
High revenue but low or declining margin offers or clients
“Hidden heroes” with smaller sales but strong margin
Direct cost lines that are drifting up without being challenged
Typical actions
Re-price or re-scope low margin work
Shift sales focus towards higher margin services
Renegotiate supplier rates or change delivery model
This KPI is often the one that turns “busy and stressed” into “busy and profitable”.
2. Operating cash runway
Benefit: Lets you sleep better at night and make braver, better-timed decisions.
What it is
Cash runway tells you how many months your business could keep going at current spend levels if no more cash came in. It links your cash balance to your real world cost base.
Formula
Work out your average monthly operating costs (excluding one offs)
Runway (in months) = Cash in bank ÷ Average monthly operating costs
How often to track
Weekly: Cash in bank snapshot
Monthly: Updated runway in months in your FD pack
What to look for
Runway dropping below your comfort threshold (for example 3 months)
Planned hires or investments that would shorten runway too far
Seasonal swings where you need extra headroom (for example VAT quarter, slower summer trading)
Typical actions
Slow or stage investment plans until revenue catches up
Bring forward funding conversations while you still have options
Tighten debtor collection or renegotiate payment terms
For founder wellbeing, this is huge. When you know your true cash runway, you can stop catastrophising and start planning.
3. Debtor days (how fast customers pay you)
Benefit: Releases cash without needing to sell more or cut costs.
What it is
Debtor days measure how long, on average, your customers take to pay. If revenue is growing but so are debtor days, you can feel permanently short of cash.
Formula
Debtor days = (Trade debtors ÷ Annual sales) x 365
You can also run a simple aged debtors report to see exactly which invoices are overdue and by how much.
How often to track
Monthly: Debtor days in your KPI pack
Weekly: Top 10 overdue invoices reviewed by your team
What to look for
Regular customers who always pay late
A drift from, say, 30 days to 45 or 60 days over time
One or two big overdue invoices creating most of the pain
Typical actions
Tighten terms for serial late payers or ask for deposits
Automate reminders and follow up calls
Train your team to have confident, respectful credit control conversations
Improving debtor days by even 10 or 15 days can free up thousands of pounds of working capital in a growing SME.
4. Overheads and payroll as a percentage of sales
Benefit: Stops “cost creep” and protects profit as the team grows.
What it is
Instead of looking at overhead spend in pounds, we track overheads and payroll as a percentage of sales. This shows whether your cost base is growing faster than your revenue.
Useful breakdowns include:
Total overheads % of sales
Payroll % of sales
Marketing % of sales
How often to track
Monthly: In your management accounts, ideally with trend graphs
Quarterly: Review against target ranges agreed with your FD
What to look for
Payroll % drifting up after a hiring round, with no matching revenue growth
Overheads stuck at a higher level after a one off project or move
Marketing spend not translating into revenue within your expected time frame
Typical actions
Set simple guardrails (for example “payroll at 35 to 40% of sales”)
Delay additional hires until revenue is consistently above a trigger level
Rebase overheads if you have grown but not revisited suppliers or premises
This KPI is particularly important for MDs and CEOs who are scaling headcount and want to protect operating profit while still moving fast.
5. Monthly recurring revenue or contracted revenue
Benefit: Gives you forward visibility so you can plan with confidence.
What it is
Recurring or contracted revenue is the portion of your income that is already committed for future months. For agencies, consultancies and subscription models, this might be retainers or contracts. For product businesses, it could be repeat order patterns.
Key metrics include:
Monthly recurring revenue (MRR)
Contracted revenue for the next 3, 6 and 12 months
Percentage of total revenue that is recurring
How often to track
Monthly: As part of your sales and pipeline review
Quarterly: To support hiring and investment plans
What to look for
How many months ahead you have good visibility of income
Dependence on a small number of large clients
Gaps where you need to build pipeline now to avoid future dips
Typical actions
Shift the offer design towards retainers or recurring packages
Put retention initiatives in place for key clients
Build a clearer new business rhythm to smooth out peaks and troughs
When we combine recurring revenue with cash runway, founders move from “I hope this works” to “I know what we can afford and when”.
How to make these KPIs work in real life
There is no point in beautiful dashboards no one reads. A simple, consistent rhythm is what makes KPIs powerful.
Here is a practical way to run it:
Weekly 20 minute review
Check cash in bank and updated cash runway
Review top overdue invoices and who is following up
Scan any big movements in sales or costs
Monthly 60 minute “Board style” review
Look at all 5 KPIs with commentary, not just numbers
Ask: What is this telling us? What will we do differently next month?
Capture 3 to 5 actions with clear owners and deadlines
Over time, this rhythm reduces firefighting and decision fatigue. You spend less energy worrying, more energy making deliberate, data-informed choices.
Want help building the right KPI dashboard for your business?
Your SME might not need a full-time Finance Director yet, but it does need strategic financial support that grows with you, not ahead of you.
With a part-time, fractional FD you get clarity, control and confidence without the corporate price tag. It is the smarter way to scale: access to top tier financial insight, flexibility to match your pace, and tailored guidance from someone who understands what it is like to grow a business while still sleeping at night.
When the time is right, you will know, because your strategy, systems and results will make the case for a full-time FD. Until then, think fractional, and let strategic finance become your growth engine rather than a monthly headache.
Schedule a free consultation and discover how strategic finance can transform your business and your headspace.