How Do You Measure the Success of Your Small Business?
For most entrepreneurs, finding success in their small business is job one. However defining “success” isn’t always so easy. Additionally different entrepreneurs may have different goals for their businesses, making the notion of success even more subjective.
So how can you measure how successful your small business is? Recently Mike Kappel of Forbes offered a few ideas of his own, ranging from the technicals of finance to far less quantifiables, such as happiness. Here are a few ways small business owners can truly measure their success.
Customer feedback and repeat business
Today’s consumers have a multitude of outlets where they can share what they think about a business, their service, and their products. While some small business owners may see this as a threat, the successful ones see this as an opportunity. Beyond the hyperbole and perhaps even scamming that happens on online forums, these sites can also offer honest insight into how you can improve or show the ways in which you’re succeeding. Furthermore you may even want to consider your own surveying efforts and ask customers exactly what they liked about your business/product and what, if anything, they would do to improve it.
Another indicator of customer satisfaction is repeat business. For that reason it’s important to keep track of your customers where possible and know when they re-order. A high re-order percentage will let you know that you’re doing something right. If you don’t know what that is, perhaps you should ask your most loyal customers.
Number of new customers
As mentioned return customers are a great sign that you’re onto something. However bringing in a wave of new customers is an even better sign. After all, while serving the same group of loyal customers might help your business stay afloat, it’s new customers that will help you grow. If you’re finding that your business is lacking some “new blood,” it may be time for a new marketing campaign or perhaps incentivizing your loyal customers to spread the word.
Of course ensuring that your new customers have as good of an experience with your business as older ones is key, so be mindful about stagnation. In fact a new customer who has a bad experience can often drown out all of your loyal customers when it comes to word of mouth, thus defeating your efforts. Again, this is where looking at feedback from previous customers can really come in handy and help set you up for success.
Financials and your happiness
At the end of the day there’s no avoiding the fact that businesses of any size need money in order to survive. Because of this, managing your business’s finances is still extremely important. All entrepreneurs should know how much their company makes, how much they spend, and how much cash they have on hand in order to effectively make decisions and improve the business.
That said, the amount of money business need to bring in order to be a success is open to debate and interpretation. For example a business owner serving a small niche while earning a living for them and their family can be a considered as much of a success as a Fortune 500 company with a much larger market and staff. Ultimately it’s all about your expectations and your happiness.
You’d be hard pressed to find an entrepreneur who starts a business and isn’t looking for success in some form. That’s why it may be surprising that there really is no standard formula for determining how successful a small business really is. However, if you have many returning, satisfied customers, are also attracting new customers, and are happy with the money you’re making, chances are that your small business is indeed a winning success.