How to Measure Your Business Growth & Performance
As a small business owner, how do you effectively measure your business growth and what exactly is the measure of success in your business performance?
When you run a business, it is important to be able to measure how it is growing.
How else will know whether your marketing is working and whether the products and services you are selling are what your customers want?
You may think that your business is growing, but without the data, you won’t ever know for sure. Equally, you may feel as though you are not doing very well in business, when the reality is that you are growing quickly.
Not being aware of your growth is just as bad for business as overestimating it because you won’t be ready to take the next step when you need to.
Here are some useful ways to measure your business growth so that you can do what is necessary to move forward.
Know What to Watch
The first step in understanding how to measure your business growth is to to set goals and know what benchmarks you should be checking.
The process for setting actionable KPIs goes something like this:
- Review business objectives
- Analyze your current performance
- Set short and long term KPI targets
- Review targets with your team
- Review progress and readjust
For a great detailed explanation of how to set KPIs, check out this HubSpot post.
Knowing what business elements to track is the biggest hurdle Once you know what you’re looking out for you can also monitor these easily overlooked indicators of business growth.
1. Are you Sustainable?
This is kind of a biggie…
Are you covering costs and making a profit?
2. Regularly Check Your Bank Account
I know that this seams stupidly obvious, but it’s surprising how many business owners don’t check their bank accounts regularly, or even at all.
It might be that they are afraid to look because they think there is not a lot of money there, or conversely that they feel they don’t need to look because they ‘know’ there is a lot of money there. However, this is an easy and quick way to determine how much your business is growing, and whether there is plenty of money or hardly any.
As a business owner you have to keep up with income and expenditure.
Using your bank account to check for growth is simply a matter of comparing the current figures with that of a month ago, or six months ago, or a year ago and so on. You can then immediately see whether you are making more money (growing, in other words) or less.
Something that should also not be neglected and can easily be checked at the same time as your bank account are employee wages.
In some cases, a paystub maker may be required so that you can keep your records up to date as this makes things even easier. You can see how much you are paying people now compared to a set period of time ago, and you can see how many people you are paying.
The more money going into wages, the bigger your company will have become.
Many small businesses opt to handle payroll internally, but I think it’s important to recognize that there are a number of benefits for you and your business if you decide to outsource your payroll to a knowledgeable and reputable payroll vendor.
For example; many certified CPA’s will not only help you avoid common tax hurdles, but can effectively handle payroll. I think you will find that the business benefits of a good CPA will will far outweigh the expense.
4. Get Customer Feedback
Being able to keep your customers happy and satisfied is a big part of growth and success, and therefore it is a good idea to get feedback from your customers.
The happier your customers are, the more likely they are to use your services again and to let their friends and family know about what you do. Asking your customers how well they think you have performed over the last six months, for example, will give them a sense of importance and membership, but it will also give you some important insights into how much you have grown and how things have changed.
5. How Many Customers?
Growth in customers means a growth in business.
Another simple way to measure growth is to count the number of customers you are getting.
By comparing both online or physical in-store customers on a daily, weekly and monthly basis to the previous time period and year will provide valuable insight into both your business growth and performance.
You should be doing this anyway to understand how well specific advertising campaigns have worked for you in order to determine ROI and profit margins.
Are your customers and employees sticking around?
If you are experiencing high employee turnover and/or lack of return customers – this is a sign that things are NOT moving in the right direction.
Using step 4 above your customer feedback should be used to improve the customer experience by improving your business operations. Likewise, this same principle should be applied to your employees to help ensure that you’re providing a great work environment.
Retention of both employees and customers is a key indicator of successful business growth.
Understanding how to measure business growth is an essential component to business success. Keep in mind that business growth isn’t simply about watching money – it’s about utilizing the right people and keeping people happy.