Why Small Businesses Should Set Goals and Track KPIs

Goal-setting and KPIs are the cornerstones of every successful business. 

For small businesses, especially in the first five years, clearly-defined goals are the difference between survival and failure. Did you know that 50% of small businesses fail within the first five years of operation? From there, only about 30% of small businesses make it to the ten-year mark. 

The first few years are critical for establishing stability and long-term success. One of the most effective ways to navigate this period is by setting clear, measurable goals. 

At Acctivator, understanding your goals is the first step of our collaborative process for a reason. They’re that important and they work. 

Here’s how to work with your team (even if you’re a team of one) to identify and track KPIs for success. 

What Are KPIs and Why Do They Matter?

Setting goals gives businesses a clear path forward—before all the daily distractions and temptations come into play—and they will come into play. Clear objectives help business owners and employees stay focused on priorities rather than getting lost in day-to-day operations. 

Key Performance Indicators (KPIs) are metrics tied to specific business objectives. 

KPIs, when crafted thoughtfully, provide meaningful data that keep a business on the road to their objectives while (ideally) maintaining their overall mission and values. 

Examples of KPIs:

• Customer Acquisition Cost (CAC) – Measures how much it costs to acquire a new customer, helping businesses manage marketing spend efficiently.

• Customer Lifetime Value (CLV) – Estimates the total revenue a business can expect from a single customer, aiding in long-term profitability planning.

• Gross Profit Margin – Reflects the percentage of revenue that exceeds the cost of goods sold, showing how efficiently a business is generating profits.

• Inventory Turnover Rate – Tracks how quickly inventory is sold and replaced, helping businesses optimize stock levels and reduce carrying costs.

• Employee Productivity Rate – Measures output per employee, ensuring that resources are being used effectively and identifying areas for efficiency improvements.

The Role of KPIs in Tracking Progress

KPIs help business owners and managers make data-driven decisions. 

Instead of relying on intuition, businesses can use KPIs to track progress and identify areas that need improvement. By keeping track of KPIs, small businesses are less prone to surprise or confusion when it comes to business growth or business decline. 

KPIs provide a roadmap that can be tweaked, improved, and optimized regularly. 

Why KPIs Are Essential for Small Businesses

Small businesses must operate efficiently to stay competitive. 

Unlike larger corporations with abundant resources, small businesses need to maximize their efforts. Luckily, KPIs are a great tool to give live insight into any business. 

KPIs help to identify strengths and weaknesses, making it easier to adjust strategies, improve performance, and consistently track what actually matters. 

How SMART Goals and KPIs Work Together

If you’re going to set effective goals for your business, they may as well be SMART. 

SMART Goals Are: 

• Specific – Clearly defined objectives.

• Measurable – Quantifiable metrics.

• Achievable – Realistic based on resources.

• Relevant – Aligns with business priorities.

• Time-bound – A defined timeline for completion.

SMART goals create a well-rounded picture of what it might take to achieve a certain business goal. 

For example, if you’re running a fast franchise, your SMART goal might look like this:

Goal: Increase monthly revenue by 15% within the next 12 months by enhancing customer experience and marketing efforts.

• Specific: Improve customer satisfaction by streamlining ordering processes, launching a loyalty program, and boosting online presence.

• Measurable: Track revenue growth, customer retention rates, and online engagement metrics.

• Achievable: Implement small but impactful changes like faster service, new promotions, and strategic digital marketing.

• Relevant: Aligns with the franchise's growth and customer engagement objectives.

• Time-Bound: Achieve a 15% increase within 12 months.

Tracking and Adjusting

Identifying KPIs and setting SMART goals to put them into action is just the beginning. The regular tracking is where the magic happens. 

If metrics indicate that a goal is not being met, adjustments can be made to improve performance. If metrics are exceeding expectations, goals can be adjusted to aim higher. A small business owner can also take this data and apply it to other KPIs in the business. 

Overcoming Challenges in Setting and Tracking Goals and KPIs

As a small business, it can be tempting to “look at your neighbor’s homework.” When we become distracted by what others seem to have, we’re losing the plot. 

Every business, even the competitor that seems to be operating on an identical business plan, is different. Try to focus on your own goals and your own success. And, remember, marketing is everywhere. Just because your competitor seems to be doing “better”, that might not be the case at all. 

When it comes to goals and KPIs, look at the mirror straight on.

Avoiding Overwhelm

Start with a few impactful (but doable) KPIs and gradually expand. 

Just like Goldilocks, it’s important to get your goals and KPIs “just right”—and this might take a little trial and error. Find a sweet spot goal. This goal will be aspirational, but within the realm of possibility, too. 

Attack your most impactful goals first. Instead of looking to expand the entire business at once, set goals that create healthy, repeatable, cash positive practices. As you achieve these goals, expand to your secondary goals over time.  

Focusing on too many metrics can lead to confusion, inefficiency, and fatigue. 

Ensuring Data Accuracy

Accurate data is crucial for making informed decisions and tracking the metrics that support them. 

Businesses should invest in reliable tracking tools and ensure consistency in data collection.

Staying Committed

Staying committed to your goals doesn’t mean creating new, unfocused goals or fixating on vanity metrics. 

Setting regular review meetings and celebrating progress keeps teams engaged and motivated. Taking time to celebrate small wins can boost morale—and take your team to the next level. 

It’s just as important to take time to track what didn’t work, and adjust accordingly. Take time to check in on your goals. 

It will only reinforce the importance of goal-setting and tracking.

Aligning Business Goals with Mission

Goals should align with a business’s mission and vision to ensure long-term success. 

Along with driving towards financial success, these value-aligned goals also keep the mission at the core of every decision. 

Example of Aligning Goals + Mission

For example, if a retail business has a mission to provide exceptional customer service, one of its goals might be to improve customer retention. 

Specifically, this could involve setting a target to increase repeat customers by 15% within a year. To align with their customer-centric mission, this retailer won’t succumb to hacky tales tactics. 

Instead, they will look for ways to create a real relationship with their customers, like implementing a loyalty program and other personalized marketing efforts.

We spoke with Landon Eckles, Professional EOS Implementer at EOS Worldwide, about the importance of KPIs and how they relate to small business goals. Here’s what he has to say:

“Monitoring the right KPIs, or 'measurables' as we call them in EOS, is critical to business growth and success. Think of them like the instrument panel in an airplane’s cockpit - you need to keep an eye on the right data to ensure you're heading in the right direction. I guide my clients in identifying the 5-15 most important measurables to track each week and how to review the scorecard to stay on course. Tracking these measurables weekly helps leaders determine whether the business is on track to meet its annual goals.”

Improving Resource Allocation

Goals help prioritize the use of time, money, and energy. This makes it clear to focus, avoid distractions, and identify inefficient processes quickly. 

Employees who have clear goals and KPIs know what tasks to prioritize. Instead of spending hours on activities that don’t directly contribute to the business’s objectives, they can focus on actions and financial reporting that enhances decision-making processes. 

Businesses that set clear objectives are less likely to spread their resources too thin. 

How Acctivator Supports Goal-Setting and KPI Tracking

At Acctivator, we believe that meaningful goals and trackable KPIs are the backbone of starting and growing a successful business. That’s why we use goals as our starting point. Acctivator simplifies financial data tracking and helps businesses align their goals with measurable KPIs. 

With customized reporting dashboards and expert consulting, Acctivator ensures that businesses have clear and actionable insights—and that’s not even the best part. 

As an Acctivator partner, your success is our success. We celebrate hitting, exceeding, and expanding our goals and we grow together. It’s the best part of what we do. 

To learn more about how Acctivator can help your small business succeed through expert accounting and strategic insights, reach out today!

Landon Eckles is a seasoned entrepreneur and Professional EOS (Entrepreneurial Operating System) Implementer based in Southern California, serving businesses locally and across the nation. As a founder turned coach, Landon brings firsthand experience from scaling and successfully selling a business, giving him a unique perspective on the challenges and opportunities leaders face. With a passion for empowering leadership teams, Landon leverages his expertise to help organizations achieve clarity, alignment, and sustainable growth. By implementing proven tools and strategies, he guides businesses toward achieving their vision and long-term success.