Complete Guide to Business Metrics for Entrepreneurs

Running your business without key metrics is like driving against traffic on the highway blindfolded. You have no sense of whether you are moving in the right direction, how far off are you, and what you have to do to correct course. At the same time, you have a lot on the line and the risk of failure is really high.

Because metrics are so important for new and existing businesses, we put together this extensive guide to help entrepreneurs prepare a good framework for measuring their success.

Business Metrics for Entrepreneurs in 2025

Tracking key business metrics may be essential for your journey as an entrepreneur and also for your company's performance. Many well-known metrics can guide your strategic decision-making and help you plan future steps and resources. Although you can find tons of different business metrics online, we have selected the following expert list to cover in our guide:

• Financial Metrics
• Marketing Metrics
• Product Metrics
• Customer Engagement Metrics
• Growth Metrics

What’s the difference between Metrics and KPIs?

Metrics and Key Performance Indicators (KPIs) are often used in the same context and are connected to how you measure your company's performance.

KPIs are a subset of all metrics you follow that are strategically important to your business. They are directly related to whether you will achieve or not your goals. In this sense, KPIs are the “must-have” metrics for you.

In general, metrics can be very broad and have informative meanings but might not be crucial for your business's success. For example, page views on your blog might be a good indicator of how well you can attract readers to your website but might not directly impact your product sales. However, if your main product is your blog and you are selling subscriptions, page views might be a good KPI to follow.

Financial Metrics for Businesses

Revenue

The total amount of money brought into the company is one of the most important startup metrics, representing a company's ability to generate value. It corresponds to market demand and how well the product or service resonates with customers. It’s also one of the first metrics investors and stakeholders check when assessing a company's financial performance.

The increase in revenue is a strong indicator of company growth and ability to scale.

Recurring Revenue

Recurring revenue is usually considered in the context of a time frame, such as Monthly or Annual Recurring Revenue. This is a business's regular income, usually due to a business model based on subscriptions or long-term contracts.

The strong recurring revenue indicates good predictability of your business and makes business forecasts more reliable. It also signals high customer retention, which can be due to product stickiness and product-market fit.

High recurring revenue is a great foundation for further scaling your business.

Gross Profit

Gross Profit is the revenue left after subtracting the cost associated with producing and delivering the product or service, also known as the Cost of Goods Sold (COGS) or the Cost of Sales.

The Gross Profit is an important metric as it shows how efficient the company is in its operations.

Total Contract Value (TCV) and Annual Contract Value (ACV)

These two metrics are related to revenue from contracts. Both of them measure the amount of the contract over a certain period.

The total contract value is for the full duration of the contract. It includes all subscription fees as well as one-time costs like installation and training fees. The metric is used to evaluate the deal size and the sales impact.

The annual contract value is the amount of the contract minus all one-time fees over the number of years of the contract. This metric is useful for measuring recurring revenue when sales are made with multiyear contracts. The ACV distributes the revenue evenly over the whole contract duration, as opposed to spiking the first year and going down to zero in all other years.

Lifetime Value (LTV) or Customer Lifetime Value (CLV)

LTV is a metric that is closely related to TCV and ACV. The Lifetime Value is the total revenue expected from a single customer during their entire relationship with the company. This could be the sum of all contracts and all subscription fees a given customer pays.

LTV is important to track as it is closely related to the Customer Acquisition Cost (CAC) to ensure profitability. If you spend more money to attract a customer than you earn, this will not result in a sustainable business model.

Burn Rate

Burn Rate is the rate at which a company spends its money to cover expenses, usually measured monthly. It’s a critical metric for early-stage businesses and startups as it determines how much time the company has before running out of cash.

Different types of burn rates can be measured:

• Gross Burn Rate: the total monthly operating expenses
• Net Burn Rate: Gross Burn Rate - Monthly Revenue

By measuring and tracking burn rate, companies can get a good overview of their profitability when they need to seek more funding and their runway.

Runway

Runway is the time a company can continue operating before running out of cash based on its current burn rate and available cash. It’s usually reported in months, and the simple formula you can use to calculate it is: (cash balance)/(Net Burn Rate).

Net Profit

Net profit (net income or bottom line) is the difference between total revenue and expenses (including COGS, operating expenses, taxes, debt, etc.). If the total revenue is less than the total expenses, the net profit can be negative. This means that the company is spending more than what it’s earning, which is often the case in the company's early days. During that period of time, the company uses the invested capital to develop its product or service, build a business model, and attract customers.

Marketing Metrics for Businesses

Conversion Rate

The conversion rate measures the efficacy of your marketing effort. The marketing initiative can influence the target audience to perform a given action. A conversion might be defined based on the goal of the marketing campaign. It could mean:

• A registration
• A purchase
• Downloading a whitepaper
• Subscribing for a blog

If you have a marketing campaign with a landing page visited by 100 users, and 12 of them click on the button to download a whitepaper, the conversion rate of this campaign is 12%.

Cost per Acquisition (CPA)

The CPAs are the efficiency of your campaign - in other words, how much you are spending for a single conversion. You may have a high conversion rate of 70%, which comes at a high cost per acquisition (like $500 per customer) as you cherry-pick each lead and provide white-glove service to them. Depending on your business model, this might work, but keeping an eye on CPA will ensure you are within your budget and unit economics boundaries.

Product Metrics for Businesses

Active Users

Active Users are the number of users who engage with your product or service over a given period of time. This is most often measured on a daily (DAU), weekly (WAU), or monthly (MAU) basis.

Higher amounts of active users are better as this means more users are experiencing your product and potentially extracting value from it. Increasing MAU is a signal for a growing customer base, while increasing DAU may indicate more frequent engagement with the product by a single user.

The definition of “active user” is important and should be adjusted to your product's use case. In some cases, just visiting a website might be considered an activation, while in others, the user may have to take a series of actions to become active.

The best strategy for defining activation reliably is to relate it to the way users extract value from the product. That might be opening a page, filling in a form, or doing something else.

Activation Rate

The activation rate is how many of the registered users become active users. Again, the definition of activation here is important for the activation rate to be a meaningful metric.

The activation is often associated with the first “Aha” moment.

Adoption Rate

The adoption rate measures how many users integrated the product or service into their routines. Depending on the product and the job to be done, this might mean different things. The key here is to find what it means for the product to be an integral part of how a customer solves one or more of their needs.

Customer Engagement Metrics for Businesses

Customer Churn Rate

The customer churn rate (or just churn) is the number of users who abandon your product or service divided by the total user base over a certain period of time. For example, if you lost ten customers last month from a 1000 customer base, this means you are facing a 1% monthly churn rate.

As long as you have a higher adoption rate than the churn rate, you have a foundation for a growing customer base. Nevertheless, high churn rates are a serious red flag and might signal:

• Attracting wrong customers
• The product doesn’t solve the customer's problem
• The product is not sticky enough, and customers leave after the job is done

Customer Retention Rate

The customer retention rate is the opposite of the customer churn rate. It measures how many of the company's existing customers it is able to retain.

Net Promoter Score (NPS)

The Net Promoter Score is a specific question asked of the customer to indicate the customer's overall satisfaction with the product. The questions are usually phrased as:

“How likely is it that you would recommend [your company or product] to a friend or colleague?” the answer is given as a number from 0 to 10.

Respondents who answer between 0 and 6 are considered detractors; those who answer 7-8 are neutrals, and those who answer 9-10 are promoters.

Finally, the metric is calculated by % Promoters - % Detractors.

By asking specific behavioral questions (would you recommend) instead of opinionated questions (do you like the product), respondents provide a more objective and unbiased assessment of the product.

Growth Metrics for Businesses

Month-over-Month (MoM) Growth

The MoM Growth measures the difference in a certain metric from one month to the next. It’s often used for active users, the number of paying customers, etc., and indicates how fast the certain metric grows in the short term.

The problem with that metric is that multiple seasonal factors might affect it. For example, sales are multiple times higher in December compared to November and January due to the holiday season. This may give wrong indications of business success or issues that are due to external factors.

Year-over-Year (YoY) Growth

The year-over-year metric is used to address the problem with the MoM metric. It compares a given metric for a given month to the same month last year. It shows the improvement made on the given metric over one year by possibly avoiding seasonality.

How to Pick Your Main Business Metrics

What gets measured gets done

Picking the right metrics to follow will significantly influence the execution of your business strategy. People and teams tend to overfocus on metrics, and picking the wrong metric can derail your operations. At the same time, picking metrics that are aligned with your business objectives can be rocket boosters for your company.

Although no single metric fits all businesses, some principles can help you find the appropriate set of metrics for your case.

1. Align with Goals

Each company goes through different stages of development, each with different goals and priorities. In the earliest days, acquiring new customers might be the #1 priority, while later on, retention and referrals might be more important to build momentum. Depending on where you are at the moment, pick a metric from the list that covers your priorities.

2. Keep an Eye on the Entire Customer Journey

Regardless of your priorities and the main metric you chose to focus on, keep a list of secondary metrics that provide a full overview of the customer journey - from the first interaction with your brand until they are offboarded. This is important for several reasons:

1. Secondary metrics can provide useful insights into how to influence your primary metric. Metrics are not isolated vectors—they are just measurements of one whole journey of your customer and your business, and in most cases, they have strong connections with each other.
2. You must pick a different metric once you move to the next phase. You don’t want to start from scratch, and having historical data and observations across the whole business will keep the momentum going.

3. Define Actionable Metrics

When you define the metrics you will be following, you must know “then what?” for each of them. How do you plan to use the data that will start flowing? What decisions is this going to influence? How are these metrics connected to the actual value your company delivers?

Having answers to these questions will help you avoid vanity metrics and focus on metrics that have an impact.

Wrap Up

The right set of key metrics is a critical tool for managing your business. It can help with troubleshooting when things are not moving in the right direction and provide the insights needed to achieve your next milestone.

Icanpreneur is a platform that helps entrepreneurs express their business idea before start validating it and nailing down the right set of metrics is key step of that process.

Business Metrics FAQs