Column: Ray McCreadie - Measuring business performance

Business success varies significantly among companies. For some, it is measured by sales metrics, while others focus on social impact.

Many successful businesses generate sufficient profits, allowing owners to expand their ventures and achieve financial stability. However, small business owners may prioritise factors beyond profits, such as work-life balance, eco-friendly products, or social missions.

Being a small business owner comes with its fair share of challenges running and growing your business, from marketing to finding qualified employees. Here are a number of tips to help you scale and grow a successful business:

1.     Identify your mission - Is your mission to provide a unique service? a low-cost item? or to be environmentally friendly? Successful businesses have a mission, even if it is simply to provide customers with the best value possible. Crafting a mission statement outlines your business purpose and serves as a roadmap for success. Regularly review your initial business plan and mission statement to stay aligned with your goals

2.    Create goals – When creating business goals, it is essential to make them SMART, meaning they are specific, measurable, achievable, relevant, and time-based. They can be financial, operational, or even growth-related. A goal for one business owner is to sell a specific number of units per month over a year to drive up sales, while for another it is to ramp up marketing efforts and gain a target number of social media followers. Entrepreneurs can revisit their goals, allowing flexibility in shaping and adapting their business roadmap. Monitoring progress and analysing business data are essential steps to ensure progress toward those goals.

3.    Build a dedicated team - A dedicated team is inclusive, collaborative, and reliable, and is essential to building a successful business. Research has shown that assembling a team diverse in age, gender, and ethnicity, among other factors, increases productivity. Highly effective teams actively seek feedback and embrace a wide range of opinions, fostering creativity and enhancing problem-solving.

4.     Implement marketing strategies - Effective marketing plays a crucial role in charting your business journey, allowing you to track goals through key performance indicators (KPIs). By implementing diverse marketing strategies—ranging from paid advertising to robust social media campaigns you enhance brand awareness, a fundamental factor driving sales. Marketing strategy involves short and long-term plans for a business and takes many forms: collaborations with like-minded businesses, pop-ups for specific projects or events, and social media campaigns (leveraging platforms like Facebook, LinkedIn, Instagram, and TikTok). Each of these approaches exposes your business to a new target market. Additionally, fostering connections by joining professional associations or attending conventions can help market your business and broaden your potential customer base.

5.    Ensure customer satisfaction - When it comes to building a loyal customer base, repeat customers are like gold. They provide a stable source of revenue, reduce revenue volatility, and contribute significantly to a business’s success.

6.    Make the best product / service possible - Developing an outstanding product or service with a compelling value proposition indeed provides a competitive edge. When you focus on quality, customer satisfaction, and effective marketing, you create a solid foundation for success.

7.    Getting organised - When financial records, business licenses or permits, tax forms, or other documents, whether virtual or paper-based, are difficult to locate or go missing, it can be frustrating and distract from time spent on your business. Managing bookkeeping is crucial for any small business. While some entrepreneurs manage it themselves, however by sharing the workload with a part-time bookkeeper can streamline financial operations and ensure accuracy and timely financial reporting which allows you to track your cashflow, optimise tax deduction opportunities and plan how your business is going to grow.

8.    Embrace change - In the dynamic business landscape in which we work, challenges like market fluctuations, competition, demanding clients, and technical issues are common. To thrive, businesses must embrace agility, adaptability, and a willingness to pivot. These qualities empower organizations to navigate obstacles and seize opportunities. When facing challenges in your business, such as lackluster sales, stay committed to your marketing efforts. Explore new strategies and adapt or unreliable supplier, embrace change by finding a more dependable partner. Remember, flexibility and determination are key to overcoming obstacles.

9.    Make self-care a priority - Taking care of yourself is essential for overall well-being. Resting, sleeping, exercising, eating well, relaxing, and spending time with family and friends are all forms of self-care essential for mental health, including for entrepreneurs. For many business owners, it is easy to slip into the 24/7 work cycle, however you can achieve more when well-rested.

10.  Give back to the community - Business success is not always defined by profitability. Even with limited resources, entrepreneurs can make a positive impact within their community by participate in business-related events or community initiatives. These activities could include donating in raffles or charity auctions; speaking at schools or workshops; sharing your entrepreneurial journey to inspire others; mentoring aspiring entrepreneurs or students; committing to use ethically sourced materials in your products. Remember, small actions can create a ripple effect of positive change.

Finally, measuring the success of your business involves tracking various Key Performance Indicators .These indicators provide valuable insights into your business’s performance and helps you make informed decisions. Here are a number of KPIs to put in place to evaluate your business performance:

·         Setting Goals: Establish clear goals for your business and measure them regularly

·         Customer Satisfaction: Regularly assess customer satisfaction through surveys, reviews, and feedback. Delighted customers often lead to repeat business and referrals.

·         Financial Metrics: Keep an eye on financial health. Metrics like revenue, profit margins, and cash flow provide insights into your business’s financial success.

·         Website Traffic: If you operate online, monitor website traffic. A healthy stream of visitors indicates interest and engagement with your content.

Remember, if you cannot measure your business performance, you cannot manage your business.