What KPIs should a start up track each month?

Launching a start up is exciting, but it also means stepping into a world where decisions need to be backed by data rather than guesswork. I meet so many founders who focus on branding, product, or sales, yet overlook the numbers that quietly determine whether the business is growing, stable, or heading for trouble. In my opinion monthly KPI tracking is the difference between running a business confidently and constantly feeling reactive.

This article explains the most valuable KPIs a start up should measure every month. I cover what they mean, why they matter, who they apply to, how to calculate them, and how each one links to long term success. By the end you should have a clear picture of how to build a simple yet powerful monthly KPI dashboard that strengthens decision making and reduces financial risk.

Understanding the role of KPIs in a start up

A KPI is a measurable value that shows how effectively your business is achieving its goals. For a start up the right KPIs act as early warning indicators, helping you understand whether revenue is rising, whether cash will last, and whether your business model is actually working.

Unlike established companies, start ups need KPIs that focus on survival and growth rather than optimisation. I always remind founders that a KPI is only useful if it drives action. Data without decisions is just noise. The right KPIs should show what to fix, what to double down on, and where money is leaking.

Before tracking KPIs it helps to understand the two broad categories:

1. Financial KPIs

These show the health of your money, such as revenue, margin, runway, or cash flow.

2. Operational KPIs

These show how well your processes, marketing, and customer acquisition are performing.

In my opinion both areas matter equally. Too many start ups only track marketing numbers and ignore cash which is usually the first reason new businesses fail.

Monthly KPI 1: Monthly Recurring Revenue (MRR) or Monthly Revenue

MRR is the backbone KPI for subscription businesses such as SaaS platforms, membership sites, and retainer based services. For non subscription businesses you would simply track total monthly revenue instead.

What it measures

MRR shows predictable income generated each month from subscriptions or repeating services.

Why it matters

MRR helps founders understand growth, stability, and long term viability. If MRR grows steadily the business has a strong foundation. If it fluctuates wildly you need to investigate customer retention, pricing, or marketing consistency.

How to calculate it

Add the monthly subscription value of all active customers. For one off businesses track total revenue each month and look at trends.

Real world example

A digital marketing agency with 15 clients paying an average of £350 per month has an MRR of £5,250. If one client leaves that is an immediate 6 percent drop so retention becomes a top priority.

Monthly KPI 2: Cash Burn Rate

Burn rate is the amount of money your start up spends each month. I believe this is one of the most important KPIs for new businesses because it tells you how long you can survive before needing new investment or revenue.

Why it matters

A high burn rate reduces your runway. A controlled burn rate shows discipline which investors love.

How to calculate it

Total monthly expenses minus total monthly revenue.

Example

If you spend £10,000 per month and bring in £4,000 your burn rate is £6,000.

Monthly KPI 3: Cash Runway

Runway tells you how many months you can continue operating with your current cash balance before hitting zero.

Why it matters

It is impossible to make strategic decisions without knowing your runway. In my opinion founders should always know this number.

How to calculate it

Cash balance divided by monthly burn rate.

Example

If you have £48,000 in the bank and burn £6,000 per month your runway is 8 months.

Monthly KPI 4: Gross Profit Margin

Margin matters more than revenue because it shows whether your business model is financially sound. If your margins are weak you will struggle to hire, scale, or reinvest.

Why it matters

It tells you whether each sale contributes enough profit to support overheads, salaries, and growth.

How to calculate it

(Gross profit divided by revenue) multiplied by 100.

Real world example

Product businesses often operate at margins between 20 and 50 percent. Service businesses often achieve 60 to 85 percent. If your margin is far below industry norms you need to adjust pricing or supplier costs.

Monthly KPI 5: Customer Acquisition Cost (CAC)

CAC shows how much it costs to acquire a new customer through marketing and sales activity.

Why it matters

If CAC rises faster than revenue your business becomes unprofitable. I see many founders spend aggressively on Facebook ads without understanding how much each customer is costing them.

How to calculate it

Total marketing and sales spend for the month divided by number of new customers acquired.

Example

If you spend £2,000 on ads and gain 40 customers your CAC is £50.

Monthly KPI 6: Customer Lifetime Value (LTV)

LTV is the estimated total revenue a customer generates over their entire relationship with your business.

Why it matters

The ratio between LTV and CAC is one of the most widely used start up metrics. In my opinion an LTV to CAC ratio of at least 3 to 1 is a solid benchmark.

How to calculate it

Average purchase value multiplied by purchase frequency multiplied by retention length.

Example

If a customer spends £30 monthly and stays for 18 months, LTV is £540.

Monthly KPI 7: Churn Rate

Churn rate measures the percentage of customers who stop buying or cancel their subscription each month.

Why it matters

High churn destroys growth because you constantly replace lost customers. Reducing churn is usually cheaper than increasing sales.

How to calculate it

(Customers lost this month divided by customers at the start of the month) multiplied by 100.

Monthly KPI 8: Conversion Rate

This KPI tracks how many leads convert into paying customers.

Why it matters

Improving conversion rate is one of the fastest ways to increase revenue without raising ad spend.

Example

If you had 500 website visitors and 15 purchases your conversion rate is 3 percent.

Monthly KPI 9: Operating Expenses

Operating expenses include rent, software, salaries, marketing, and all general costs.

Why it matters

Monitoring expenses each month helps you spot overspending early. In my opinion many start ups overspend on subscriptions, office space, and software they barely use.

Monthly KPI 10: Accounts Receivable Days

If you invoice customers, this KPI tracks how long it takes to get paid.

Why it matters

Slow payments hurt cash flow and shorten your runway.

Example

If invoices are consistently paid in 45 days instead of 30 your business may struggle to meet its own bills.

Monthly KPI 11: Website Traffic and Lead Volume

These KPIs apply to almost every start up because most sales journeys begin online.

Why they matter

More traffic and leads typically mean more opportunities to convert. These KPIs also show whether your marketing is working.

Monthly KPI 12: Customer Satisfaction Score (CSAT) or Net Promoter Score (NPS)

Customer satisfaction is one of the strongest indicators of long term growth.

Why it matters

Start ups with happy customers benefit from referrals, lower churn, and stronger brand loyalty.

How it is measured

• CSAT often uses a simple rating out of 5

• NPS measures likelihood to recommend on a scale of 0 to 10

Monthly KPI 13: Employee Productivity and Capacity (for service based start ups)

If your business sells time or service delivery, this KPI is essential.

Why it matters

Low capacity utilisation means you are paying salaries without generating enough revenue.

Example

If a consultant has 120 billable hours available per month but only bills 60, capacity utilisation is 50 percent which reduces profitability.

Building a simple monthly KPI dashboard

In my opinion every start up should have a monthly dashboard using simple tools such as:

• Xero reports

• A Google Sheet

• CRM analytics

• Marketing dashboards like Google Analytics

Your KPI dashboard should highlight:

• Revenue trends

• Cash flow

• Upcoming tax liabilities

• Customer behaviour

• Operational efficiency

• Marketing performance

The most effective dashboards show data visually so you can spot trends and problems instantly.

Practical tips for start ups tracking KPIs

Keep it simple

You do not need fifty KPIs. Start with five to ten that matter most and build from there.

Review every month without fail

Consistency matters more than perfection. I recommend reviewing KPIs in the first week of every month.

Take action based on the numbers

If CAC rises, change marketing. If churn increases, review customer experience. If runway shortens, reduce spend or increase revenue.

Make forecasts

Plot your KPIs forward three months to anticipate future challenges.

In my opinion dashboards should be shared

If you have staff, investors, or advisors, sharing your KPIs keeps everyone aligned and accountable.

Real world examples of KPI improvements

Example 1: Reducing burn rate

A start up software firm reviewed expenses monthly and cut unused tools which saved £1,200 per month. This added two months to their runway.

Example 2: Improving conversion rate

A fitness ecommerce store analysed its conversion rate and found the checkout process had too many steps. After simplifying it the conversion rate rose from 2 percent to 3.8 percent, increasing revenue without extra ad spend.

Example 3: Reducing churn

A subscription based service introduced onboarding emails for new members. Churn dropped by 30 percent within two months.

Final thoughts

Monthly KPI tracking gives founders clarity, control, and confidence. It reduces anxiety because you understand exactly where the business stands financially and commercially. In my opinion the most important thing is to track metrics that directly influence survival, profitability, and growth.

Once you build a simple KPI dashboard and use it consistently you stop guessing and start managing the business proactively. This discipline separates strong start ups from those that burn out quickly.