About 20 percent of small businesses fail in their first year. But don’t get too confident because another 50 percent fail by their fifth year, according to the Bureau of Labor Statistics. Understanding where your business is currently at is important because it will help you gauge where it is headed so you can strategize smartly. One critical question you should be able to answer now, whether you’ve been operating for a few months or a few years, is whether your company is actually growing. So how do you measure success in your small business?
9 Ways to Measure Success in Your Small Business
There are many ways to quantify your success. They include the following:
1. You’ve established brand awareness.
You know your company is steering in the right direction when you are able to establish significant brand awareness. How brands grow is a complicated process. According to Byron Sharp, director of the Ehrenberg-Bass Institute for Marketing Science at the University of South Australia, consumers’ ability to recall a particular product is among the strongest drivers in consumer purchases. When people have become familiar with the distinctive qualities of your product or brand, you’ve done a pretty good job.
2. You’re gaining profits.
One of the most obvious ways to measure success is profitability. If you are earning more than what you are spending to operate and sustain your small business, you are succeeding. How do you calculate your profit margin? There are three steps to do it:
- Get your net income by subtracting your total expenses from your revenues.
- Divide the net income by your revenue.
- Multiply the result by 100.
3. Your business has grown.
Maybe you’re not seeing significant increases in your earning. However, in the past few months, you have expanded your business; for example, maybe you took personal loans to purchase more equipment so you could double your production, and hired more employees as well. Growth and expansion are another way to measure business success. Of course, you could have little money left after scaling up, but it’s a sure sign that your small business is getting bigger.
4. Your employees are doing really well.
Did you know that talent scarcity is real? If you have a pretty awesome team working for you, you know you’ve reached a certain milestone in your business. Some of your greatest resources are your employees. When you have well-trained, high-performing people on your team, you can achieve greater milestones and achieve business success easily.
5. You have satisfied and happy customers.
Hearing people saying great things about your products or services is like music to your ears. Your customer base is the blood of your business. Without them, you are less likely to succeed. Happy customers are a sign that your business is on the right track. It means that you are catering to their needs and giving value to their money by offering quality service.
6. You’ve reached the expectations in the market.
For your brand to be successful, you need to understand what people (especially your target market) wants. With so many brands to choose from, consumers these days have become more demanding. Expectations affect how people think, feel, behave, and how they perceive a product. There’s countless research suggesting that our expectations radically shape our reality. When you’ve come to the point that you’re meeting the expectations of your customers, you’ve reached a good amount of success.
7. You’ve positioned yourself in a good spot in the marketplace.
Maybe you want consumers to see your clothing products as a luxury brand. Or, you want to be known as the best provider of durable, long-lasting kitchenware, a premium coffee bean manufacturer, or an innovative tech service company. Market position refers to consumers’ perception of a brand in relation to the competing brands. It’s basically establishing an image or identity so that people perceive your brand in a different way, and certainly a way to measure success.
8. Your employees are satisfied.
Your employees are your internal customers. Thus, you should look after their happiness and satisfaction too. When your employees are happy, you don’t need to do much to make them productive and obtain their commitment.
9. You have gained a high level of reputation in your industry.
Reputation is essential to the growth and survival of your business. For you to have a huge base of customers, you need to earn their trust and confidence. Business reputation covers many aspects, including organizational ethics, employee performance, leadership, management, quality, reliability, and customer focus. There are plenty of ways to increase your business reputation. These include establishing trust, being responsive to your customers’ needs, resolving errors and mistakes promptly, and offering value.
As you can see, there are many ways to measure success in your small business. If you’re doing at least one of the things on this list, take it as a positive sign, and keep working to achieve even more.
About the Author: Lidia Staron has been working as a writer, editor and literary coach for 5 years. She contributes articles about the role of finance in the strategic-planning and decision-making process. You can find really professional insights in her writings.
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