Anyone who has seen Shark Tank knows that there are plenty of ways to measure business success. It can be hard to take a step back and look at your own business like a “shark” would, but it helps ensure you’re doing everything you can to make your company a success, and lets you take action if there are areas that need improvement. The following are some hard success metrics to gauge your business’s success:
1. The break-even point
This is the number you need to get to in a given period (generally monthly or quarterly) in order for the company to cover its own costs and sustain itself even if it is not making a profit during a slow time.
2. Leads generated and leads converted
You need to keep track of where your leads come from (direct mail, email, ads, etc.) to help you decide where to allocate your marketing dollars. Likewise, you should also know how many of these leads actually become customers, which helps track growth.
3. Sales indicators
Volume and frequency of sales can provide information on overall business success. You can break this down by sales to new customers, sales to existing customers, profit per sale, which products/services are making the most money, or any other categories that might be important to your business. Keeping track of these numbers can provide valuable insight for other actions. For example, if you see sales to existing customers suddenly drop, you can investigate why.
4. Net income ratio/profit
Your profit – the money left over after operating expenses are subtracted from revenue – is a pretty important one. After all, you need to make sure your business still makes money after you pay your expenses. A business just starting out, or one experiencing a bit of a slowdown, may have a bottom line in the red at some points, but you should aim to always be growing your profit. If you are losing money, it’s time to look at ways you can trim expenses or reconfigure your operations.
There are also some less tangible – but still important – ways of measuring the business success:
5. Customers (new, repeat and referrals)
A growing customer base is a sure sign that your business is reaching its target audience’s needs. Businesses thrive because customers count on them as a go-to, but also because happy customers will refer others. Consider offering a referral incentive, which will pay off by helping attract new customers and help you gauge your current customers’ satisfaction. Keep all your customer information in one place and be sure to have a way to track where they come from.
6. Employee satisfaction
As the face of your business, your staff is a critical part of your company, and helping ensure they have a positive work environment that lets them do their jobs with pride and efficiency will in turn help your business succeed. If your employees feel appreciated, they are more likely to go the extra mile for the customer, which will increase customer satisfaction and therefore lead to referrals and new customers – the business circle of life.
7. Your satisfaction
Not to be discounted is your own satisfaction with your business and the direction it’s going. If you aren’t happy, it can trickle down to your employees and then to your customers. Make sure to sit down every now and again to ensure you are satisfied with where the business is heading, and make any changes if not.