Gross margin is revenue minus the direct cost of delivering the work, and it tells you whether the thing you sell is fundamentally worth selling. A business with thin margin gets worse as it grows rather than better, because every additional sale brings its cost with it and the overhead does not shrink. If the unit economics do not work at your current size, volume amplifies the problem. This is the number most under examined in small business reporting, and it is the one that decides everything.
Repeat purchase, or retention for anything recurring, is the second. A business where customers return compounds. One where they do not starts each year from zero and has to acquire its entire revenue again, which is both expensive and exhausting. It is also the earliest honest signal of whether what you deliver is actually good, ahead of any review or survey.
Then check acquisition cost against customer value, including your own time at a realistic rate. If winning a customer costs more than they produce in gross profit, growth makes the situation worse rather than better, and no amount of scale fixes it. The payback period matters as much as the ratio for a business without reserves, because a customer worth six hundred dollars over three years does not help you pay for anything this month.
What does not answer the question is revenue, effort, or busyness. A business can be fully occupied, growing, and structurally unviable at the same time, and those conditions frequently coexist because the busyness conceals the arithmetic.
Distinguish a model problem from an operations problem before deciding anything, because the responses are opposite. Sound margins and real demand with an exhausting year is an operations problem, and it is fixable through process, pricing, and delegation. Weak margins with weak repeat is a model problem, and working harder makes it worse.
Test the numbers against a larger version of the business before concluding it works. Take your current margins and repeat rate, and model what the business looks like at three times the volume. If the answer is that you would need to hire, and hiring consumes the margin entirely, the model works at your current size and does not scale, which is a legitimate outcome worth knowing deliberately.
Give it enough time to be measurable. A quarter is rarely sufficient to establish repeat purchase for anything bought occasionally, and drawing conclusions from too short a window produces false readings in both directions. For most first year businesses the honest assessment point is somewhere around nine to twelve months, which is also when enough transactions exist for the averages to mean something.