How do you know if your small business is a success? Increased profits? More customers? Hiring new staff?
Common sense indicates a business is successful if it’s running in the black. But as important as financial indicators are, they’re not the only signal of success.
Whether you’re running a lean organization — or expanding — moving beyond survival mode may seem slow and painstaking. But the ways in which your business grows — market share, community engagement, customer loyalty — are as important as financial wellbeing.
Indicator #1: Financial solvency
Of course, finances will be first on the list. Without positive cash flow and (hopefully) reserves, your business cannot survive in the long run.
Financial wellness is the first indication of success, but in the early stages of your business, it might not be clearly visible.
Most small businesses start with a loan from the owner. But loan repayments can take a back seat to keeping the wheels moving. When revenue starts coming in, and finances are more open, you’re on your way.
Red ink dominating the spreadsheets?
When you analyze your finances make sure you’re looking at key performance indicators in the right light. For example:
- Is your produced priced right? If it’s priced too high, sales may be slow. If it’s priced too low, customers might think it’s inferior quality.
- Are your sales numbers reliable? You should be checking these numbers daily and make sure they reconcile.
- Are employees hanging around rather than waiting on customers? You may be overstaffed.
If you believe you should be making a profit but aren’t, it’s time to take time to analyze every step along the way to see where you may be missing the mark.
Indicator #2: Employee satisfaction
Don’t discount employee satisfaction as a primary key to business success. Happy people work harder, which maximizes productivity (and profit). When you’ve amassed a team that works cohesively, with or (hopefully) without your leadership, you know your company is well on its way to success.
Unhappy staffers? You’ll want to turn that around quickly. The more disgruntled your staff is the less they’re performing. If you know what the problem(s) are and are in a position to remedy them, do so.
If they’re more challenging, like higher wages when sales won’t currently support them, work with your staff to come up with other ways to gain employee satisfaction. Some perks — like flexible hours, or work from home options — could be the balance they need to make it over difficult times.
Indicator #3: Reliable and growing sales
Steady, consistent growth may be a better indicator of success than explosive sales periods — unless your business is seasonal. If you see reliable sales numbers throughout the year and dependable growth, you’ve achieved success.
Sales in fits and starts? Another area for analysis. Unless you’re a seasonal business you should be seeing year-round consistency in sales and growth. Look at peaks and valleys to see where you may be missing out. There may be a pattern you could target for correction if you take the time to analyze.
Indicator #4: Customer referrals
When customers not only rely on you, but they recommend you to others, you know you’re doing something right. Whatever product or service you provide is clearly meriting recognition in the marketplace.
Do you remember to ask new customers how they found your business? In these days of internet anonymity, it’s a great idea to ask if they were referred by another customer. A quick “thank you” to the referrer is a great way to keep that momentum going!
No one recommending you? Start with your customer base to find out why not. Anonymous surveys can be a great way to find out where you can improve your customer base.
They can also help understand why word-of-mouth isn’t netting you sales. Competition in your area, for example, may necessitate you offer customers an incentive (like discounts) to get the gossip train working in your favor – well worth the cost!
Indicator #5: Brand recognition
Imagine a company that didn’t turn a profit for the first 7 years. That company is Amazon. The online retail giant launched in 1994 but didn’t turn a profit until 2001. Brand recognition (among other things) helped carry Amazon through hard times to the megacorporation it is today. Once your business is recognized in the market, you’re on the road to success.
Brand awareness is slow to build, but valuable to have. Start with making a visible mark locally and grow from there. Use social and professional media to spread the word about your business, product, or service. If you can garner some press that would be helpful too. Small town and local newspapers often highlight new employers in there area. Be open to (and look for) every opportunity to boast and boost your brand.
Indicator #6: Community buy-in
When the community is invested in your business, they’re invested in its success. Your local coffee shop is a resource for much-needed caffeine for morning commuters, but relationships with customers and the community create support for locally-owned business.
That relationship can be nurtured beyond the product or service you provide — get involved with community affairs, join Chambers of Commerce, support local charities, and sports teams. Not only will these efforts increase your visibility in your community, they’ll help your friends and neighbors realize what a valuable resource you are — all the more reason to help assure you succeed.
Don’t even know your neighbor’s names? It’s time you spend more time outside your doors than in: get involved with your community if you want them involved with you. If you’re not generally open to the public, promote a tour of your facility to let people know who you are and what you do.
You could host a parking-lot barbecue or snacks to drive traffic. In addition to community relations, you may be attracting new talent or sales. A stellar example is a local cemetery in my area: they host picnics in the summer, Veteran’s Day celebrations and even after-school Halloween events for younger kids.
Most small to medium sized business owners are often too busy working to take time to measure their success in more ways than financial.
Look beyond the Benjamins to see where your organization fits into and enhances the community – from your employees, your customers and your neighbors. Their reliance on you, and you on theirs may be the best indicator of success a small business owner can have.