KPI stands for key performance indicator, a long name for a short idea: the handful of numbers you check regularly to see whether the business is working. Now you know what the letters mean, we will just call them numbers. A one-person business needs about six, checked once a month, each with an action attached. Any number you would not act on is not a KPI, it is trivia.
At a glance
| Feature | Detail |
|---|---|
| What KPI means | Key performance indicator — a number you check regularly to steer by |
| How many to keep | About six. More than that and none of them get used |
| How often | Once a month, same day, twenty minutes. Cash weekly |
| The test of a good one | You know what you would do if it moved the wrong way |
| The one that looks forward | How full next month's diary is |
| What to ignore | Followers, website visits, hours worked — easy to count, hard to act on |
What makes a number worth tracking
Three things. You can measure it in five minutes from your bank account, your calendar or your invoices. It moves when the business changes — a number that sits still all year is telling you nothing. And you know, in advance, what you would do if it moved the wrong way.
That last one is the real filter. Before you add a number to your list, finish this sentence: "If this drops for two months running, I will…". If you cannot finish it, leave the number off.
The six numbers to keep
Sales this month
What it tells you: whether the business is above the line. Compare it to your break-even point — the amount you have to sell to cover the costs that arrive whether you sell anything or not.
When it moves the wrong way: look at your enquiries from two or three weeks ago, not today. A quiet month almost always started as a quiet fortnight of enquiries you did not notice. Our guide to break-even covers working out the line you need to stay above.
What it costs to win a customer
What it tells you: whether your marketing is paying for itself. Take everything you spent on winning customers this month — ads, leaflets, a directory listing — and divide it by the number of customers it brought in.
When it moves the wrong way: check where enquiries are coming from before you cut anything, because usually one source is quietly carrying the others. And compare the cost against what a customer is worth over a year, not on one job.
How many enquiries turned into customers
What it tells you: whether the problem is getting found or getting booked. Count the enquiries you received and the ones that became paying jobs. Twenty enquiries and four jobs is a very different business from six enquiries and four jobs, and they need opposite fixes.
When it moves the wrong way: look at speed first. How long between the phone ringing and you replying, and between the visit and the quote landing? In most trades the fastest quote wins a large share of the work. Then look at price, and at whether you are quoting for the wrong sort of job.
Average job or order value
What it tells you: how hard each customer is working for you. Divide the month's sales by the number of jobs or orders.
When it moves the wrong way: you are usually doing more small work rather than less work. The fixes are practical — a minimum call-out charge, offering the bigger version of the job, adding the obvious extra while you are there, or moving repeat customers onto a planned arrangement. Our pricing guide goes into this properly.
How much cash is in the bank
What it tells you: whether you can pay next month's bills. Check the balance, and write next to it how much you are owed and how much tax you have set aside.
When it moves the wrong way while sales are fine, you have a getting-paid problem rather than a selling problem — invoices going out late, terms too generous, or someone not paying.
How full the diary is for next month
What it tells you: what is coming. Every other number on this list is history. This is the only one that gives you warning, which makes it the most valuable of the six.
Count the days already booked for next month, as a share of the days you want to work. When it starts emptying, act immediately — that is the month you push for work, not the month after when the money stops.
A worked example
Take Jamie, a one-man 24/7 plumbing business in Reading. He charges £70 an hour and bills around 25 chargeable hours a week, which is about £7,000 a month of sales. On the last Sunday of every month he spends twenty minutes with his bank app, his calendar and his invoices, and writes down six numbers.
Sales: £7,000. Above the level he needs to cover his costs and pay himself, so nothing to do.
Enquiries: 32. Jobs won: 18. A little over half, and steady for three months, so he leaves it alone.
Average job value: £389. Seven thousand pounds across 18 jobs. He notes it and watches it, because it has slipped from £420 two months ago.
What it cost to win a customer: about £25. He spent £150 on local ads and six of the 18 jobs came from them. The other twelve came from repeat customers, recommendations and his Google Business Profile, which cost him nothing.
Cash in the bank: £3,200, with £2,100 owed to him. Comfortable, but the £2,100 is two invoices past their date, so he sends the reminders on Monday morning.
Next month's diary: 40% booked, three weeks out. This is the number that makes him do something. Forty percent is lower than the 60% he usually sees at this point, so he spends an hour that week ringing landlords he has worked for, offering the boiler services that are due. That hour is the whole reason he tracks the six numbers.
He did not build a dashboard, and he did not look at how many people visited his website. Create a mini business plan in minutes with Plan.business. Put in your rate, your hours and your costs, and it works out the rest — what you will make, when you break even, and what you need to charge to hit your target.
The traps
The dashboard nobody opens. Charts are satisfying to set up and then quietly stop being looked at. Six numbers written on the same page every month beats any dashboard. If it takes more than twenty minutes, it will not survive a busy month.
Measuring what is easy instead of what matters. Followers, page views, likes and hours worked are simple to count and none of them tell you whether the business is working. A month with more website visits and fewer bookings is a worse month. If a number cannot be linked to money or to your diary, it is entertainment.
Tracking too many. Fifteen numbers means none of them get acted on. Six is enough, and dropping one to add another is a perfectly good move.
Only looking backwards. Sales, cash and job values all describe what already happened. Without something forward-looking — the diary, your quotes outstanding, the enquiries this week — you are steering by the rear window.
Comparing yourself to somebody else's numbers. Industry averages come from businesses with different costs, prices and customers. Your own number last month is the comparison that means something.
What is Plan?
Plan is a free business operating system for people starting or newly running a UK business. It walks you, one simple step at a time, from your elevator pitch through brand, product and pricing, to a complete business plan — then uses everything it now knows about the business to help with the basics: logo and brand, marketing, a website, a bank account, funding, insurance, company registration. You can use as much or as little as you want.
The numbers you steer by only mean something against a target. Plan works out what you need to sell, what each sale should leave you and where your break-even point sits, so that when you write down "£7,000 this month" you already know whether it is a good number.
Frequently asked questions
What is a KPI in simple terms? A KPI, or key performance indicator, is one of the small number of figures you check regularly to see whether your business is working — sales, cash, enquiries won. The useful test is whether you know what you would do if it moved the wrong way. If not, it is not worth tracking.
What KPIs should a small business track? Six is plenty: sales this month, what it costs to win a customer, how many enquiries turned into customers, the average job or order value, how much cash is in the bank, and how full next month's diary is. That covers selling, marketing, pricing, getting paid and what is coming.
How often should I review my KPIs? Once a month, on the same day, for about twenty minutes. Cash is worth a weekly glance because it changes fastest. Reviewing more often adds noise rather than insight, and less often means spotting problems two months after you could have fixed them.
What is the most important KPI for a new business? For most small businesses it is how full next month's diary is, because it is the only one that gives you warning. Sales, cash and job values all tell you what already happened. Cash in the bank is a close second, since it decides what you can do next.
Do I need software to track KPIs? No. A notebook or a single spreadsheet tab works, and the numbers come from your bank app, your calendar and your invoices. What matters is writing them in the same place each month so you can see the direction of travel.
Two ways to do this
Do it by hand. One page, six numbers, the same Sunday every month. Write them in a column so each month sits next to the last, and put one action next to any number that moved the wrong way.
Or set the targets first. Start free in Plan. It runs in your browser — nothing to download. Plan works out what you need to sell, what your break-even point is and what a customer is worth, so your monthly numbers have something to be measured against — and exports the lot as a spreadsheet. Do just this bit, or the whole plan; both are fine.