It should be fairly obvious that if you want to know whether your business is successful or not, or just how successful it really is, you need to have some way of measuring business success. It’s a bit like traveling – if you don’t know what to look for when you get there, how will you ever know when you’ve arrived?
The trouble with trying to measure business success though, is that you’re always shooting at a moving target, i.e. things change very quickly, and a metric for success a few months ago might have no relevance today. That being the case, there should be several methods that you use to gauge how successful your SMB is – here are seven different metrics you can use.
Customer Satisfaction
This is one of the most crucial measures of business success, because if your customers aren’t satisfied with your product or service, they probably won’t be buying from you in the future – and you’ll have a short-lived business. That makes it necessary for you to find out if they’re satisfied or not, and there are several ways you can go about that. You can of course, simply ask a number of them if you have a retail outlet. If your business is online, you can survey customers on your website. You can also encourage them to review their experience with your service/product, and act on any negative reviews to make it better.
Financial Statements
This may not be original or new, but it’s certainly a good indicator of how well your business is doing. Primarily you should pay attention to the cash flow statement, the income statement, and the balance sheet. The cash flow statement will be a good gauge of your liquidity, the income statement will depict profits and losses, and the balance sheet will provide a solid glimpse into everything you own and everything you owe. Between these three financial statements, you should have a good idea of your business’ overall health.
Rate of New Customers
Measuring how many new customers you acquire from month to month can be very important, because it tells you whether your business is growing or not. If you have the same customer base for a prolonged period of time, it’s probably safe to say that your business has grown stagnant, but if you are bringing in new customers every month, this can be a good indicator of future growth and continued business success.
Competitive Position
You shouldn’t get overly absorbed in what the competition is doing, but on the other hand, it’s good to know what they’re up to. Somebody just might be infringing on your niche territory, or someone might be developing a new product or variation of an existing one, that will grab up market share. You should know how your products/services are perceived by the public, relative to your rivals.
Compare to Your Expectations
This is one metric that many small business owners overlook, simply because it’s such a personal, intuitive one. How do you actually feel your business is doing, compared to what you expected to achieve? If you’ve developed some good business instincts along the way, you should trust them when it comes to considering how well you think your business is doing. Your opinion counts.
Are You Staying Current?
Have an understanding of market conditions, so that you know why everyone in your business is going through an up or down phase. Along those same lines, try to gain an understanding of where market conditions might be headed, so you can anticipate and steer your company into the mainstream of that projected direction, and profit by it.
Performance Reviews
This is a great way to find out how well (or not) employees are managing the responsibilities and tasks of their positions. By regularly interviewing your employees, you can learn a great deal about their workloads, their issues, and hopefully even some ideas they may have for improving the business. If there are concerns, you need to know about them, so you can keep employees happy and motivated to make the business succeed.
Emory Ware