6 essential financial indicators for small businesses
Finance / Date: 06-22-2025

Performance indicators are essential management tools for any entrepreneur. After all, measuring the level of performance in each sector of the business is essential to ensure the company's growth and adjust problematic processes.
Financial indicators are certainly among the most important indicators for small businesses. They allow you to obtain data on corporate finances and identify the financial health of your company.
However, are you aware of the primary financial metrics used by small businesses? After that, read on to learn about six crucial financial metrics for small businesses!
6 Key Financial Indicators for Small Businesses
Before learning about the main financial indicators for small businesses, it is important that you understand the importance of these performance tools for any business.
Financial indicators, specifically, are closely linked to the good management of a small business. They provide entrepreneurs with essential information for analyzing the business's performance. They also help in making decisions related to finances.
Six of these crucial financial indicators for small enterprises are listed below:
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Fixed costs
Fixed costs are all of a business's recurring expenses. They are those that are repeated month after month or vary little over time. No matter what happens, they must always be paid monthly.
Office rent, cleaning and security expenses, taxes, among others are considered fixed costs for small businesses.
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Variable costs
Variable costs, in turn, are all expenses that vary monthly, according to the productive activities of a business. Raw materials and production inputs (such as water, energy, etc.) and sales commissions are examples of variable costs.
Both fixed and variable costs are fundamental financial indicators for small businesses. This is because, without knowing them, the entrepreneur will not know how much the company must produce to cover its expenses – and to make a profit.
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Cash flow
Controlling the amount that comes into and goes out of the business's account over a specific time period is known as cash flow. This indicator, therefore, helps the entrepreneur to identify the business's income and financial obligations.
And it is thanks to this that it becomes possible to analyze and monitor whether the company's operations are generating enough cash to avoid debt and generate profit over time.
Without knowing the cash flow, the entrepreneur runs serious risks of making wrong financial decisions and seeing his business sink into debt.
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Breakeven Point
The break-even point is one of the key financial metrics for small businesses. It is the minimum amount of revenue a business needs to earn to cover all of its costs and expenses.
By knowing the break-even point, the manager can identify the amount of sales (or business) needed to be generated in a given period in order to have neither a profit nor a loss. If the results are above the break-even point, there is a profit, while results below the break-even point result in financial losses.
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EBITDA Margin
Earnings before interest, taxes, depreciation, and amortization is known as the EBITDA margin. It represents the amount of profit or loss a company makes without taking into account discounts for interest, taxes, depreciation or amortization.
The EBITDA margin therefore provides the entrepreneur with information about the value and impact of sales on cash flow. This indicator is therefore calculated based on net operating profit + depreciation + amortization.
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Market Share
, Market Share – also called market share – is another important financial indicator that is essential for small businesses. It is also an important performance measurement tool.
Market Share helps entrepreneurs identify the market share in which their business has a share. A company that offers telephone services, for example, may have x% market share in a specific region of the country – or in the entire national territory.
By using this indicator on a daily basis, the company can discover its market share in percentage terms – and discover whether it is a leader in its segment.
Conclusion
Financial indicators are essential for small businesses that want to evolve and maintain sustainable development over time.
If used correctly, these tools help entrepreneurs to have a more holistic view of their business and make good financial decisions. And that is exactly why you, as a small entrepreneur, need to know them and understand how they work.
Now that you understand the importance of financial indicators for small businesses, how about preparing yourself even more to take your business to the next level and discover the impacts of digital transformation on the business environment?
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