If you don’t measure your small business’s performance, you won’t be able to improve it. There are a range of indicators that you can use to measure your company’s growth and help you to determine whether your business is on track, as well as help you to meet your business goals. Here are a few indicators to determine how well your business is doing, as well as some tools that you can use to help.
1. Web traffic
Most small businesses today have a website and possibly even e-commerce capabilities. Use tools such as Google Analytics (it’s free) to measure the traffic to your website and to see how people interact with your web content. You will soon be able to determine how people are finding out about you and which of your products or services they are the most interested in.
Also, look at your search engine rankings. For example, when someone searches for your product or service, is your company near the top of the results? Being on the first page of results is definitely first prize! If it is not, you need to do some work improving your website’s search engine optimisation. Understanding search terms used will also give you some ideas about how to refine you sales pitch or your product range to improve sales.
2. Customer satisfaction
Small businesses stand or fall by how happy their customers are. Make a point of measuring customer satisfaction, whether it’s by talking to your customers directly, or by asking them to fill in a simple satisfaction survey. Online tools such as SurveyMonkey make it a snap to run your own polls for market research.
Very importantly, take action quickly based on customer feedback.
3. Social media
Do you have a presence on channels such as Twitter and Facebook? It is here where customers praise brands they’re satisfied with and a platform where they can address concerns that they may have toward specific products or services. You don’t need to spend all day on social media; use a tool such as Hootsuite (again, the entry level version is free) to schedule social media posts that are relevant to your target audience, perhaps once a week. However, do check for customer comments and responses at least once a day – you can learn a lot from interacting with customers on social media.
Monitor customer loyalty and satisfaction trends over time – if satisfaction is rising, you’re doing well. If it’s falling, take action.
Failures in financial budgeting, forecasting, and reporting are among the biggest reasons why small businesses fail. Keep comparing your current cash flow to historical performance to ensure you can budget effectively for the future. The right software tools can help you to track financial performance indicators and answer questions such as:
• Are you turning inventory around quickly enough so that you aren’t vulnerable to falling prices and so that you have money coming in to pay the suppliers?
• Is your revenue growth on track?
• How do your costs compare to the industry average in your market?
• Are all your products lines, customers, and territories performing as well as they should be?
• How much has profitability sales grown or shrunk against the same period last year? Why?
• What impact will the anticipated electricity tariff increase have on your profitability?
• How much income is each employee generating?
Financial reporting tools are affordable, intuitive, and delivers information in Excel, which most small business owners know how to use. These tools can help track the ‘health’ of your business and having the answers to these and other questions can really help you improve your business’s performance. In a time of seismic technological change and digital invention, our smart people use the smartest technology to reinvent and simplify business accounting and reporting.
If you employ people, you should be able to measure how efficient and productive they are in a consistent manner. The measurement of productivity will depend on the nature of your business – it might be as straightforward as billable hours if you sell labour, or it could be measured in the quantity of items a worker produces per day or hour.
Try to compare yourself to other businesses – does you productivity align with the benchmarks for your industry? And compare employees to each other. Measure productivity trends by quarter or by year so that you can spot the trends and take action. For example, think about whether tablet computers could make your mobile techies more productive, or whether your artisans need more training to work more efficiently. Tracking and improving productivity is a sure fire way of beating the competition.
Millions of entrepreneurs in the world’s small and medium businesses trust us as they power the global economy. Setting objectives and tracking performance are essential steps towards growing and improving your business. Today, there are a range of simple and affordable tools that can give you objective ways to measure how well you are doing so that you can keep getting better. With the right data and information at your fingertips, you’ll know which areas of your business need attention and will be able to take action.
Charles Teversham is the Managing Director at Sage Intelligence.