You recently started a business from home despite the Covid-19 pandemic. In addition to running a new startup, you also have children to look after. You’re worried that you’ve not been doing a good job in balancing motherhood and business. You feel you’ve probably not invested as much time as you should in the business. Nevertheless, you’re hopeful that it’s on the right track and will soon record massive success.
More than just being hopeful, you need to take practical steps to measure the success of your business. Making sure you’re running a successful venture should be a priority for every business owner.
Since business is not a quantifiable product, you must be wondering how you can measure its success. Here is the guidance you need in helping you understand where your business stands.
Track the Cash Flow
When you think of business success, the first thing that comes to mind is financial status. However, it’s not as simple as looking at the monthly profits and losses and leaving it at that. Instead, analyzing the cash flow is a matter of critically looking into the income statement, cash flow statement, and balance sheet.
The Income Statement
Also known as the profit and loss statement, it’s the best place to get started in analyzing your business success. It helps you measure the profitability of your business over a certain period. You can tell how much money comes in and goes out within a month, a quarter, or annually.
The Balance Sheet
This financial statement provides a broader view of the business. It captures all the assets the business has, all debts owed, and investments made into the company. The balance sheet provides a better view of the long-term sustainability of the business.
Cash Flow Statement
The cash flow statement differs from the income statement because it looks at the liquid assets at any given time. While you might have made huge profits in the last few months, if the money is still with your clients, you can’t use the money earned.
Why is liquidity important for a business? It’s because you might need the money still not paid to you to restock your business or spend on marketing. You probably also have suppliers that you need to pay to keep the doors open. Before making any move in business, you must always have a clear picture of the cash at hand.
Check the Frequency of Sales
The frequency of business sales is another great indicator of the success of a business. Sales provide a projection of the outcome of your marketing efforts. If, for example, there’s a monthly increase in sales, you can be confident that the marketing efforts are paying off.
Measuring the frequency of sales also provides an opportunity to scale your business upwards. If you realize that some specific products sell favorably to some clients, find out what makes them appealing. You could use the same strategy or improve it to stay ahead of the competition and make other products sell.
Customer Feedback is Essential
A third approach to measuring business success is to listen to feedback from your customers. If your customers are speaking positively about your business, it indicates the presence of enthusiasm that helps a business grow. The next thing is to capitalize on it to grow your business further.
The method of collecting customer feedback largely depends on the kind of business you’re in. You can use anything from focus groups to online reviews. The main aim is to pay attention to what your customers are saying.
While analyzing customer feedback, it’s also essential to take note of the retention rate. How many customers have been coming back to your business over the period you’ve been in operation?
A strong retention rate means your business has staying power, as you already have the numbers to count on. Besides, it’s cheaper to upsell current customers than it is to find new ones. With this in mind, you should pay a lot of attention to customer retention in the long run.
Measure, Analyze Data, and Adjust Accordingly
Apart from measuring revenue and customer satisfaction, you can also track the performance of your website. You can’t make improvements if you don’t know where you started and where you currently stand. By tracking the website activity, you’ll realize there’s a lot more that happens behind the scenes that can help you amp your business.
Several tools like Whatagraph exist for tracking your website performance. You can integrate them with your social media accounts to monitor a variety of metrics. The best part is that you get all the statistics in real-time so that you can react as quickly as possible.
Make it a habit to look out for new things to measure concerning your business. Your business is constantly changing, and you’ll discover new things that you should keep tracking. If a measurement that was initially useful is no longer useful, drop it and concentrate on what’s important.
Check Your Mailing List
Your mailing list is by far the most actionable way to generate and convert leads. As you evaluate where your business stands, and its growth potential, pay special attention to the mailing list. Take your time to get rid of duplicate entries and old addresses. The aim is to have a healthy email list that you can capitalize on to grow your business.
The next thing is to ensure you have an effective email marketing strategy. Take a close look at the numbers, paying special attention to the strengths and weaknesses of the strategy. If the open rate of your emails is high but the conversion rate is below average, take some practical steps. You could do some A/B Testing to determine how you can improve the emailing strategy to better serve your business.
Measure Your Business Success Now
If you’re not measuring the success of your business, you might not know where it stands. You need to evaluate the right metrics in addition to the financial projection. Take stock of other factors including customer feedback, site traffic, and the health of your mailing list. The earlier you get started, the easier it’ll be to set your business on the right track.