Running a small business is not for the faint-hearted, with most just avoiding closure. The path forward can seem fogged with unknowns. How does a business owner know if the business should remain open, awaiting a turnaround, or close up shop? They need to measure the business success and where they are on the path to it.
Success has different and similar standards globally. In small businesses and startups, the most common business measurements are that of the rise and fall of cash flow, the number of clients being reached, and cost reduction efforts.
Start thinking in metrics
The fundamental starting point of measuring success is to start thinking in metrics. To effectively measure progress, it is vital that you have clear, strategic metrics and strong data collecting and reporting tools. Without the numbers, you are merely making assumptions, and we all know the saying about “ass-u-me”. Tracking metrics data is a conditional measurement requiring constant and consistent attention.
Setting measurable targets is an excellent way to monitor your success, but it requires experience and business acumen. Consider these points when setting targets:
Are your sales affected by seasons? For example, tourism peaks over long school holidays, toy sales at Christmas time and gelt at Hanukkahmeasure time.
Legislation changes tend to see upticks in turnover for tax, finance and legal professionals. Health & Safety legislation could see an unusual peak in sales for new equipment like PPE.
A new product launch often pushes up the sales of existing products due to the increased marketing. These would be anomaly sales and not a new level.
What are the year-on-year patterns? Is there a trend indicator to explain the increase or decrease? Can you replicate the circumstances that had a positive effect?
What is business success?
Your values will build your unique business culture, which will require some unique success metrics amongst general metrics. Values aligned to your purposes and goals create a business value system that feeds into your business success measurements.
How you measure success is based on values and goals. Without having that knowledge established first, your metrics for success will be unclear, and the resulting data won’t help your strategy.
Establishing a set of thoroughly respected values will become a part of success measurements.
How to measure business success
Here are some great ways to measure your business’ success.
The progress to goals can’t be measured without reports tracking your business data. The process is lengthy and requires lots of attention from you, but the return on investment is multi-faceted.
Finance measurements are only part of the bigger picture of measurements. Employees’ performance needs regular motivation, and a related success measurement can be done via employee performance reviews.
Avoid a negative work culture by keeping employees happy otherwise, success will be significantly hampered.
Website traffic is another measure of success that is important to track. It is, predominantly, the first interaction that potential customers have with your company and thus should receive a good investment of time, attention and money. A website, leveraged with quality SEO content and a top UX, drives leads closer to being customers.