Have you asked yourself this question lately – “Is my business growing?” Many small business owners – even those with good sales volume, could not without a doubt answer that question. The reason is that you are not looking at the key numbers in your business to track and measure success. Before you go one more day wondering how your company is performing, pull together your team and review the numbers. Here is what you should be measuring in your small business:
Email Subscribers: Your website is your home base and your email list represents the people who visit and become comfortable enough to stick around. If your list is growing, it’s a clear indication that you are providing valuable information that your customers don’t want to miss out on. You can use a service like MailChimp, Constant Contact or Infusionsoft to quickly set up an email opt-in box on your small business website. Start sending emails on a weekly basis and use the software to also track your open rates for each campaign.
Return on Investment: When you put together a marketing plan for your business, be sure that you’re tracking the ROI. Return on investment is the amount of money that you are getting back from the dollars that you put into executing marketing activities. If any of the tactics that you’re using – events, coupons, direct mail, or social media, aren’t providing a return, then don’t continue to waste money on it.
Profit Margin: If the business is not making a profit, you won’t be in business for long. Watch your profit margins to make sure that you have a sustainable difference between the cost to make and deliver your products or services and the price that you actually charge the customer. Ask yourself, “Is there anything left over after I pay my costs, including labor?” If not, adjust your price or reduce cost of goods to increase your profit margins. Otherwise you could have an expensive hobby.
Profit and Loss: In business you need to track your cash so you know what’s coming in and what’s going out. Use accounting software to make the process easier. If numbers are a challenge for you, then also hire a bookkeeper. Counting the money is not something that you want to delegate, even if you have help, make sure you review your cash flow statement yourself on a weekly basis.
Website Traffic: Using Google Analytics, you can measure the amount of visitors stopping by your website on a monthly basis. It doesn’t matter if you’re an online or brick and mortar business. If done well, your website can be a steady source of leads.
Overhead Expenses: Overhead costs sink a lot of small businesses. These costs represent fixed cost like payroll, rent, software subscriptions and phone bills. These expenses should be closely tracked and measured. Ask yourself, “Do I need to implement some cost cutting strategies?” – like hiring seasonal employees for busy seasons instead of full-time staff or moving into a shared workspace to reduce monthly rent.
Sales Revenue: Small businesses succeed from healthy sales revenues. Be sure to track on a weekly basis exactly how much money is coming in. You may notice patterns where sales drop if the business is seasonal or has a long sales cycle. When you notice these trends by measuring sales you’ll be able to make adjustments that stabilize the business. Take, for example, a landscaping company that may offer snow removal service in the winter to keep the revenue coming on a year-round basis.
Measuring is about using financial information to make business decisions. You must know your numbers consistently. The worst thing you could do is to not know that your overhead expenses are too high or that you’re lacking profit margin. Be an informed business owner, by testing and measuring everything.
How have you been tracking and measuring your business progress?
i always like moving ahead never looking back .
business like seeds it’s has to be care about them from the beginning until growing…
Melinda, I noticed your Small Business performance measurements are entirely all quantitative & I strongly believe (in spite of over 30 years professional experience as CPA in public, private, & governmental accounting, auditing, tax preparation, & business advising) that qualitative measurements (obviously both subjective & nebulous making measurement extremely difficult) has been overlooked not just by you but by almost everyone claiming “guru” qualications. Despite my professional inclinations to “crunch numbers” & quantify results, attention to non qualitative matters such as customer testimonials and referrals must be included in conversations with any Small Business owner.