Every small business is unique, and no two businesses have the same definition of success. Especially for a newer business, measuring success meaningfully is critical. Measuring success in the small business world can be a challenge when one is often faced with having to compare themselves to larger or more established competitors, big winners on Dragon's Den, and the like. However, this kind of success is not a necessity, nor is it terribly easy to measure. Here are some of the ways your can go about measuring small business success!
Profitability
Well, this seems obvious - your business wants to make money, not lose it - but it can be more complex than that. Your business wants to stay in the black, but looking at profitability on a more specific basis can help. Which customers are the most valuable to you, and why? Sometimes, the metric you choose to measure - revenue, for example - might not be the best indicator of profitability. How much did it cost to acquire the customers you needed to generate that revenue? Focusing on the best customer segments for your goals will help your profitability soar.
If you're a business that offers multiple products or services, which are you selling the most of? Is the right strategy to promote your top seller, or to put a bit extra effort into boosting your other items? Alternately is the right choice to cut back on those less successful ones in order to hone in one what's bringing you the most consistent revenue?
Customer Satisfaction
Customer satisfaction is an indication that your company understands the needs of your customers. Understanding your customers and being able to satisfy their needs is crucial to the strength of your business. Just remember, one unsatisfied customer can negate the promotional impact of several satisfied customers. Having strong customer service polices will add to the success of your company.
When it comes to measuring customer satisfaction, this can be done in a few different ways. Online reviews from platforms such as Google my Business, Trustpilot, Yelp, Bing, Amazon Customer reviews, are a great place to start. The key is focusing on the one or two platforms that make the most sense for your particular business rather than being spread too thing across too many platforms. You should never be ashamed about asking customers for reviews!
Another way to measure customer satisfaction is via your social media accounts. Happy customers are more likely to leave comments, share about their positive experience, and let their friends know that you're a great business to work with.
Average Transactions per Customer
The focus here is to do more with your existing customers and turn them into loyal advocates and repeat visitors/purchasers. This metric keeps the attention on rounding out your services, adding more value, more products and more partnerships to the mix of your business. Customer retention rate is an important metric because it eliminates your customer acquisition cost. If your product or service is a one-and-done, then an ongoing effort to constantly acquire new customers is required.
Average Dollar per Transaction
When businesses are just getting started, this number is always too low. Use this measurement to put upward pressure on your own pricing. A hard number like this, brought down to the individual customer's level, is much easier to understand in dollars and cents than all the gross revenue charts on the planet.
There are a few strategies that you can take when setting pricing. First and foremost is checking out your competition. How does their product/service plus pricing compare to yours? If you offer a seemingly similar product or service, you either need to price competitively, or explain what exactly sets you apart (speed, quality, etc.).
Owner Satisfaction
Perhaps the most important measure of business success is whether you — the owner — are satisfied with the results of business ownership. Dissatisfaction is contagious. If you're not happy with your business, it won't be long before your dissatisfaction begins to affect the employees and even the customers. Every once in a while, carve out time for a reality check. Identify the sources of your dissatisfaction and make the necessary changes before it's too late.
As you can see there are many ways to measure small business success. If your business is looking for financing help it needs to succeed by these or even other measures, get in touch with us today and get things started!
