It can be tough trying to track the growth and success of your business. While many people think success is only measured by the revenue a business earns, the situation is actually a lot more complex. To help deal with this situation, many metrics have been developed over the years for businesses to better understand if they are doing well and what areas may need improvement. These metrics often referred to as key performance indicators (KPI) can be hard to truly grasp and understand. On top of this, their sheer number can make it difficult to know which ones are really important and which ones aren’t. With that in mind, let’s take a look at a few key metrics that will help your small business grow.
Before moving on, it’s important to mention that as an inexperienced business owner, making sense of these metrics and how to improve them can be quite challenging. Because of this, it may be worth looking for outside help through the assistance of a business coach or a consultant firm to help you get started.
Customer acquisition cost for small business grow
As a business, one of your primary goals is going to be attracting new customers. However, every customer you gain most likely won’t come to you for free. You are going to have to spend money on increasing the exposure your business gets through marketing and on the costs of sales associated with each new customers. The customer acquisition cost metric will show you if your marketing is efficient and worth what you are paying for it. To calculate this metric, you will simply have to divide the total costs of getting new customers with the total number of new customers you’ve acquired over a certain period. Tracking this metric will also give you deeper insight into what marketing techniques are working for you and save you from pointlessly spending money on the ones that aren’t.
Hours worked per process
While looking into metrics such as customer acquisition cost can tell you a lot about your marketing and its efficiency. It will be pointless unless the inner workings of your business aren’t in tiptop shape in the first place. One of the biggest costs of doing business is paying for labour. So, you should do everything in your power to make sure everyone is working as efficiently as possible. The hours worked per process metric will give you the information you need to figure out if your employees are working at a satisfactory capacity. This will give you the opportunity to boost the productivity of your business and set the foundations for future growth and success.
Even though revenue shouldn’t be the sole measure of your success, at the end of the day. It’s crucial to the survival of your business. There are many metrics that can help you optimize your revenue but a very important one is tracking operating expenses. With so many expenses within your business, it’s easy to overlook the importance of properly managing. The ones that occur on a regular basis, especially when the times are good. Actively tracking and optimizing them will not only increase your profits but it will teach you that, in the long run, every penny counts.
Utilising the right data through metrics can help you become a substantially better business owner by allowing you to make decisions that are based on facts rather than your intuition alone. With markets becoming more competitive by the day, learning to use this power is the only way to guarantee your business will grow and overcome any obstacle it may face.