Nov 01, 2019
Want to know how well your business is performing? Not sure how to track and measure your performance indicators? As a business owner, it is imperative to measure your business progress to learn where you are struggling, so as to apply the necessary measures to get back on track. Continue reading to find out which measures to track.
Often enough, the thought process of a business owner is how to effectively measure how well the business is progressing, as it is widely known that business is unpredictable with continuous and sudden changes never too far away.
This is why tracking your progress is vital, as it can help you determine which areas of your business are doing well, allowing you to consolidate on those areas. However, measuring business progress is more than just looking at your business earnings as true measures of success are more qualitative than quantitative. The following are tips on how to measure business progress.
If you want to measure your business progress, taking track of your financial statement is important. That's why many business owners measure the success of their business by looking at the company’s finances. Though it is a good way of measuring progress, it is not as straight forward as that. To correctly measure the financial viability of a business, there are three different financial statements to consider; this includes your income statement, balance sheet, and cash flow statement.
The Income statement is used to measure how profitable the business is over a certain period of time as it shows you the profit the company is making as against its loss. The balance sheet gives you a more detailed state of your finances as it shows you your assets, debts and the sustainability of your business. Lastly, the cash flow statement gives you an idea of how much liquid cash is actually at hand.
There is no business that has no need for customers as they are the major source of income and knowing the actual number of new and existing customers is a good way to measure the steady progress of your company. By measuring the average number of customers, you get an idea on how to shape your business decisions. For example, if your business is averaging the same number of customers per year, you may need to focus more on your marketing strategy, so as to create more awareness for your business.
A growing customer base with steady leads shows that the business is moving in the right direction. An effective method of measuring your customers is by developing a client list with email addresses to track them.
Another critical way to measure the progress of your business is by determining the level of customer’s satisfaction. This measurement is very crucial as customers are the lifeblood of any business and if they are left unsatisfied after patronising a particular business, they may not return.
Customer satisfaction can be measured in different ways such as through surveys and reviews, but the most common and efficient way is by getting feedback from customers directly. It is essential to pay attention to tracking how customers respond to your service as it gives you a good idea of how your business can improve. Taking measure of your customer retention records helps you to ascertain if your business is appealing to customers as strong retention numbers mean your business has a strong appeal which you can count on. On the other hand, low retention numbers allow you to know where exactly to improve customer satisfaction.
Business owners often underrate or overlook the vital resources already available to them, which in this case are their employees. Employees are one of the essential resources required to run any business. Having good employees that work well together and key into the core values of your company will make a whole lot of difference. However, it is important to keep track of the performance of your employees, as a drop off in their performance may significantly affect the progress of the business.
An effective way of measuring employee performance is by conducting performance reviews. This gives you an indication as to how satisfied employees are with their jobs and how to improve their performance by identifying their strengths and weaknesses. Conducting performance reviews helps to increase your workplace productivity without necessarily increasing your workforce.
Your employees are the face of your business, and it is crucial to create a positive work environment that lets them do their jobs effectively and efficiently which will reflect positively on the business.
When you measure employee satisfaction, it gives you an idea of what impacts productivity at work and how best to motivate your employees. This can be carried out by using an Employee Satisfaction Index (ESI) which asks questions such as “how satisfied are you with your current workplace and job”, “how well does your workplace meet your expectations” and “how close is your current workplace to your ideal workplace”. These questions help you to determine the level of satisfaction among your employees.
Most times, it is essential to know how effective your marketing strategy is in order to measure the progress of your business. Measuring your marketing performance is crucial as it allows you to determine the amount of invested resources in marketing in relation to your marketing activities. Evaluating the process also provides checks and balances to the strategy, helping to adhere to the budget and meeting deadlines.
The metrics that really matter in measuring your marketing effectiveness are Marketing contribution to revenue which indicates how your marketing strategies are contributing to the financial growth of the business; Cost per lead which measures the cost of marketing against the income generated. Once these metrics are captured, you can gauge the progress of your business.
Often overlooked, your expectations as a business owner should not be discounted as your level of satisfaction with the business will affect business decisions. Ensure to take regular appraisal so as to effect changes when they are needed.
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