When you run a business, you should constantly monitor it to make sure that it is in good health. But how do you determine whether a business is doing well or not? Profits are the obvious answer here, but that’s only one thing you should consider. Even a business that is making big profits on paper can have serious issues. Equally, just because a business isn’t turning a massive profit right now, that doesn’t mean it isn’t a success. So, what other metrics should you use to measure business success?
The Number Of Leads Generated
One of the most important things to measure is how many leads you generate for any given campaign. This figure should be as high as possible, ideally at least 50% higher than whatever goal you set yourself. Why? Because even if those leads turn out not to result in sales, they are still opportunities for future business. In short, they demonstrate the potential long-term value of the business. Value is different from money in the bank and it’s a better indicator of success. You might have lots of cash in the bank right now, but if you are not generating leads, your business is not going to sustain itself. This top entrepreneur podcast delves further into the difference between value and money and why it’s so important. Understanding the distinction will change the way you view your business and make you a far more successful business owner.
Recent Growth
One of the most underrated metrics to look at is how quickly your business grew last year. The first nine months are often too slow for people to notice, but if you can get through that period and grow significantly in the last three months, it shows huge potential. It also tells you that whatever strategy you’re using, it’s working. Provided this trend continues over successive years, there is no reason why the growth won’t continue. If it doesn’t, however, your current approach may not be sustainable or effective enough to keep growing at a rapid pace.
Growth is expensive and requires a lot of investment. So, on paper, it might look like you didn’t make much of a profit and you don’t have much in the bank, but your business is still moving forward.
Customer Satisfaction
This metric is often overlooked, even though it’s a good indicator of whether your business is on the right track. You need to score as high as possible here and ensure that at least 90% of customers say they are satisfied. Anything less than this number probably means you have some serious problems on your hands. But if your customers are all satisfied, that means they are likely to come back in the future. As long as you have a lot of repeat customers, you have a stable business that will be able to grow in the future.
Profits are not the only way to measure success and, in fact, they are one of the worst because they can be misleading. So, look at these other metrics instead if you want a clear picture of the health of your business.
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