Is Your Store Financially Healthy? 7 Metrics You Need To Track

Accounting & Taxes

Topic summary

The post outlines seven key financial metrics organized by business maturity stage to help merchants improve profitability. Research indicates merchants tracking appropriate metrics achieve 28% net profit margins versus the 20% average.

Startup Phase metrics:

  • Conversion Funnel (CTR, Add-to-Cart Rate, Conversion Rate) - identifies where potential customers drop off
  • Benchmarks from surveying thousands of merchants: CTR ~1.5% (TikTok) / ~2% (Facebook), ATC Rate 6-7%, CVR 2%+
  • Return on Ad Spend (ROAS) - measures revenue per ad dollar, but doesn’t account for all costs
  • Net Profit on Ads Spend - reveals true advertising profitability after all expenses

Scaling Phase metrics:

  • Net Profit and Net Profit Margin - essential for understanding overall business health

Maturity Phase metrics:

  • Customer Lifetime Value (CLV) and LTV:CAC Ratio - ensures acquisition costs don’t exceed customer value
  • A 3:1 ratio or higher is considered healthy (earning $3+ for every $1 spent on acquisition)

The post includes a case study of SureGolf, which achieved 70% net profit growth in two quarters by tracking these metrics and optimizing ad spending. The author invites discussion about challenges in tracking financial metrics.

Summarized with AI on October 30. AI used: claude-sonnet-4-5-20250929.
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Did you know? Merchants who keep track of the right metrics tend to have a net profit margin of 28% compared to the average 20% (source).

7 Metrics to grow your business stages- Startup Phase

  • Conversion Funnel
  • Return on Ad Spend (ROAS)
  • Net Profit on Ads Spend
  • Scaling Phase
  • Net Profit
  • Net Profit Margin- Maturity Phase
    • Customer Lifetime Value (CLV)
    • LTV:CAC Ratio

Know Your Business Stage and Key Metrics#### 1. Startup Phase

In the early days, every dollar counts. Through these metrics, you can quickly learn what product or marketing effort works and adjust your approach so you’re not wasting money.

  • Conversion Funnel (Click-through Rate; Add-to-Cart Rate; Conversion Rate): Find out where visitors drop off before buying.

Through these metrics, you will know whether a product is worth scaling or not while testing it through your advertising efforts.

  • After surveying thousands of TrueProfit merchants, we’ve identified the key benchmarks for profitable scaling:
  • CTR: ~1.5% for TikTok, and ~2% for Facebook.
  • ATC Rate: 6% - 7%
  • CVR: Aim for 2%+

Note: These benchmarks are more applicable to low-ticket products and may vary for high-ticket ones.

  • Return on Ad Spend (ROAS): See which ads are bringing in more money.

Measure how much revenue your ads generate per dollar spent. However, ROAS alone doesn’t account for all costs, so it’s not always a true profitability indicator.

Much better metric to look at: ↓

  • Net Profit on Ads Spend: Check that your ad spending is truly profitable.

This metric factors in all costs and reveals the true profitability of your advertising, enabling you to make better decisions to scale your ads profitably.

2. Scaling Phase

When your business starts growing, these metrics help you see if you have a strong foundation for further expansion. You can decide where to invest more and where to cut back.

  • Net Profit: Know your actual earnings after all expenses.

This metric is arguably the ultimate measure of a business’s financial health. A healthy net profit means your business is making money, not losing it.

Common mistake: Merchants often overlook ad spend and hidden fees, leading to lower-than-expected profits.

  • Net Profit Margin: See how much profit you keep compared to your sales.

This metric is crucial for determining if your business is financially sustainable and profitable enough to scale up.

To scale your business effectively, aim for a net profit margin of at least 15%. If your net profit margin is 5% or lower, scaling your business is out of the question. To quickly check yours, try this free profit margin calculator.

3. Maturity Phase

At this stage, growth might slow down, but your goal is to maintain strong profits and loyal customers. Tracking these metrics helps you optimize your spending and keep your business steady over time.

  • Customer Lifetime Value (CLV): Understand how much each customer is worth over time.

CLV helps you focus on the long-term value of customers rather than just immediate profits. By understanding it, you can justify spending more on acquiring and retaining customers, knowing that the investment will pay off in the long run.

  • LTV:CAC Ratio: Make sure the money you spend to get a customer is well worth it.

A healthy LTV:CAC ratio is essential for sustainable business growth. It ensures you’re not spending more to acquire customers than they’re worth

A ratio of 3:1 or higher is considered good (For every dollar you spend on acquisition, you’re making at least 3 dollars in return)

Real-Life Success: SureGolf’s Story

Meet SureGolf —a brand that makes cool golf training aids.

Achieving 70% net profit growth in just two quarters was a game changer. Using TrueProfit, we focused on the right metrics, quickly spotted overspending, and fine-tuned our ad campaigns so every dollar worked harder

- Tom, Owner of SureGolf

Your Next Step

Are you ready to know exactly how much you’re earning? By tracking the right numbers for your business stage, you can stop guessing and start growing your profits.

Join the Conversation: What challenges do you face in tracking your numbers? Share your thoughts in the comments!