Summary: I explain why most business owners glance at numbers without using them well, and share a complete KPI system to track what matters, focus your effort, and build a better life.
5 things you’ll learn in this article
- Why glancing at revenue or checking the bank balance is not the same as having a proper KPI process, and what changes when you build one.
- How to design the life you want before you set a single target, because your numbers should serve your life, not just your business.
- The exact spreadsheet structure I use, including how to set medium and long-term targets and keep things clean across months and years.
- A complete list of KPIs across marketing, sales, customers, revenue, finance, time, and even life quality, with equations for every single one.
- How to use the traffic light system so your priorities are immediately obvious every time you open the sheet.
Your KPI system does not need to be complicated.
In fact, the simpler it is, the more likely you are to actually use it.
At its core, this is just a spreadsheet. But it is a very intentional spreadsheet.
In column A, you list the KPIs you want to track. These are the numbers that matter in your business. Not everything, just the things that actually give you a meaningful read on how the business is performing.
In column B, you set your medium-term targets. This is where you want to get to over the next few months with some focused effort. It is realistic, but it still requires progress.
In column C, you set your long-term targets. This is the version of the business that supports the life you are trying to build. This is not just a bigger version of today. It is a better, more aligned version of the business.
From there, you have a template column where any formulas live. This keeps things clean and consistent, especially for anything that needs to be calculated.
Then, from the next column onwards, you track your KPIs month by month.
I like to keep the most recent month closest and work backwards from there. That way, every time you open the spreadsheet, you are immediately looking at what is happening right now, without needing to scroll.
Each year gets its own tab. Again, this keeps things clean and makes it easy to review trends over time without clutter.
The KPIs to Track
Marketing
Marketing spend
Total amount spent on marketing in the period.
Equation: Sum of all marketing expenses
Number of leads from lead source 1–5
Number of new leads generated from each individual source.
Equation: Count of leads per source
Number of new leads
Total number of leads generated across all sources.
Equation: Lead source 1 + 2 + 3 + 4 + 5
Lead acquisition cost
Average cost to generate a single lead.
Equation: Marketing spend ÷ Number of new leads
Sales
Number of new paying customers
Total number of leads converted into paying customers in the period.
Equation: Count of new paying customers
Conversion rate of leads to paying customers (%)
Percentage of leads that convert into paying customers.
Equation: (New paying customers ÷ Number of new leads) × 100
Customer Base
Total active customers (including suspensions)
Total number of customers on your books, including those currently on hold.
Equation: Active paying customers + Suspended customers
Returning customers
Number of previously inactive customers who have rejoined.
Equation: Count of returning customers
Customer growth (net)
Net change in customer base driven by acquisition and loss.
Equation: New paying customers − Customer departures
Customer departures
Number of customers who have left in the period.
Equation: Count of departures
Customer suspensions
Number of customers currently on hold.
Equation: Count of suspended customers
Suspension rate
Percentage of total customers currently on suspension.
Equation: (Customer suspensions ÷ Total active customers) × 100
Retention rate of existing customers
Percentage of last month’s customers who remain active this month.
Equation: ((Previous month customers − Customer departures) ÷ Previous month customers) × 100
Churn rate (% of customers departing)
Percentage of last month’s customers who have left.
Equation: (Customer departures ÷ Previous month customers) × 100
Average customer lifespan (months)
Estimated average duration a customer stays, assuming stable churn.
Equation: 1 ÷ Churn rate (expressed as a decimal)
Client reactivation rate
Percentage of inactive customers who return in the period.
Equation: (Returning customers ÷ Total inactive customer pool) × 100
Net Promoter Score (NPS)
Measure of customer loyalty based on likelihood to recommend.
Equation: % Promoters − % Detractors
Average customer effort score (CES)
Average score indicating how easy it is to use your service.
Equation: Sum of CES responses ÷ Number of responses
Service Utilisation
Number of customers utilising service 1–4
Number of customers using each specific service.
Equation: Count per service
Cost of service 1–4
Price charged for each service.
Equation: Set price per service
Revenue
Revenue from service 1–4
Total revenue generated by each service.
Equation: Customers using service × Cost of service
% of revenue from service 1–4
Proportion of total revenue generated by each service.
Equation: (Service revenue ÷ Total revenue) × 100
Revenue from other sources
Revenue generated from non-core offerings (e.g. retail).
Equation: Sum of all other revenue streams
% of revenue from other sources
Proportion of total revenue from other sources.
Equation: (Other revenue ÷ Total revenue) × 100
Financial Summary
Total revenue
Total income generated by the business across all sources.
Equation: Sum of all revenue streams
Total expenditure
Total costs incurred by the business.
Equation: Sum of all expenses
Owner benefit (salary, drawings etc)
Total financial benefit taken by the owner.
Equation: Salary + Drawings
Expenditure excluding owner benefit
Total business costs excluding owner payments.
Equation: Total expenditure − Owner benefit
Business profit
Profit retained within the business after all expenses.
Equation: Total revenue − Total expenditure
Business profit + owner benefit
Total financial benefit generated for the owner.
Equation: Business profit + Owner benefit
Customer Financials
Customer acquisition cost
Cost to acquire each paying customer.
Equation: Marketing spend ÷ New paying customers
Average revenue per customer
Average revenue generated per customer.
Equation: Total revenue ÷ Total active customers
Average expenditure per customer
Average cost incurred per customer.
Equation: Total expenditure ÷ Total active customers
Average profit per customer
Average profit generated per customer.
Equation: Average revenue per customer − Average expenditure per customer
Profit margin per customer
Percentage profit generated per customer.
Equation: (Average profit per customer ÷ Average revenue per customer) × 100
Customer lifetime value (profit-based)
Total profit generated per customer over their lifetime.
Equation: Average profit per customer × Average customer lifespan
Time Economics
Total hours worked
Total number of hours worked across all activities (billable and non-billable).
Equation: Sum of all hours worked
Hourly rate
Return generated per hour worked.
Equation: (Business profit + Owner benefit) ÷ Total hours worked
Life Quality
Satisfaction with life scale (Total /35)
Overall life satisfaction score across five measures.
Equation: Sum of all five scores
In most ways, my life is close to my ideal (/7)
Self-rated alignment of life to your ideal.
Equation: User-rated (1–7)
The conditions of my life are excellent (/7)
Self-rated quality of life conditions.
Equation: User-rated (1–7)
I am satisfied with my life (/7)
Self-rated overall life satisfaction.
Equation: User-rated (1–7)
So far, I have gotten the important things I want in life (/7)
Self-rated achievement of important life goals.
Equation: User-rated (1–7)
If I could live my life over, I would change almost nothing (/7)
Self-rated contentment with life overall.
Equation: User-rated (1–7)
How to use this
This only works if you actually use it.
The system itself is simple. The value comes from the rhythm.
At the end of each month, you go through and manually enter your numbers. You pull them from your bank account, your accounting software, your CRM, wherever they live. You do not automate this. The act of finding the numbers is part of the process. It forces you to engage with the business.
Once those numbers are in, you now have a clear, current snapshot of reality.
From there, each week, you review the sheet. You don’t need to update everything weekly, but you do need to look at it. This is where it becomes a decision-making tool, not just a reporting tool.
You scan the sheet and ask a simple question:
Where am I off track?
This is where most business owners go wrong. They either try to work on everything at once, or they work on whatever feels urgent in the moment. Your KPI sheet removes that guesswork.
It shows you where your attention is actually needed.
From there, your job is to make decisions. What are you going to work on this week that will move one of these numbers in the right direction? Not ten things. One or two things that matter.
That’s how this compounds over time.
The traffic light system
To make this even clearer, you can apply a simple traffic light system to each KPI.
Green means you are at or very close to your target. You don’t need to spend time here. Maintain it, but don’t obsess over it.
Orange means you are on the way, but not quite there. This needs attention, but not urgency. Keep an eye on it and make small adjustments.
Red means you are well below target. This is where your focus needs to go. This is the constraint in your business right now.
When you look at your sheet through this lens, your priorities become obvious.
You don’t need to guess what to do next.
Your KPI sheet tells you exactly what to do next.
Your action steps:
- Write down what you want your life to look like before you build or update any KPI spreadsheet.
- Set up a simple spreadsheet with a column for KPIs, a medium-term target, and a long-term target.
- Manually pull your numbers from Xero, your CRM, and other sources at the end of each month.
- Review your KPI sheet every week and identify the one or two numbers that most need your attention.
- Apply the traffic light system so your biggest constraint is always easy to spot.
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