Revenue is a lagging indicator. Here's what to watch instead.
Every founder obsesses over revenue. I get it — it's the number everyone asks about, it's what shows up in press releases, it's how we keep score. But revenue is a lagging indicator. By the time it shows up, the decisions that created it were made months ago. Here's what to watch instead.
Revenue tells you what happened. It doesn't tell you why it happened, whether it will happen again, or whether the business is actually healthy. A business can grow revenue while destroying its culture, burning out its team, and building a customer base that's one bad quarter away from churning.
I've seen businesses with $20M in revenue that were one key client away from collapse. And I've seen businesses with $5M in revenue that were rock solid — predictable, scalable, and worth far more than their top-line suggested. The difference wasn't the number. It was the quality of the business underneath it.
Measure revenue, yes. But measure it alongside the indicators that tell you whether that revenue is sustainable, scalable, and valuable.
Customer concentration: what percentage of your revenue comes from your top three clients? If it's more than 40%, you have concentration risk. Diversification isn't just a financial strategy — it's a growth enabler.
Employee retention and engagement: your team's stability is a leading indicator of your business's stability. High turnover is expensive, disruptive, and a signal that something is wrong with your culture or your leadership. Track it.
Gross margin by product or service line: not all revenue is created equal. High-volume, low-margin revenue can mask the fact that you're working harder for less. Know where your real value is created.
The metrics I track with every client: revenue growth rate (not just revenue), gross margin percentage, customer acquisition cost vs. lifetime value, employee retention rate, leadership bench strength (can your team run without you?), and net promoter score.
These six metrics tell a more complete story about your business than revenue alone. They show you where you're strong, where you're fragile, and where the next growth lever is.
The businesses that scale to 75x don't just grow revenue — they build quality into every dimension of the business. That's what the metrics are designed to measure.
Revenue is important, but it's not the whole story. The businesses that scale sustainably are the ones that measure and manage the leading indicators — the metrics that predict future performance, not just report past results.
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