Measuring Success in a Small Business
Before you can hope to be able to measure the success of your small business, you must set out what “success” means. You need to examine why you founded the business, what you hoped to achieve at that time and whether your target has shifted since then.
Even if the purpose of your business has changed since you established it, you should be following a business plan. This plan should state, in measurable terms, what your small business is striving to achieve. By comparing your actual success against the objectives you have set in your business plan, you should get an accurate picture of your business’s success.
Setting Measurable Objectives
It is important when you write any sort of business plan to ensure that it clearly states your business objectives, and does so in a way that makes it easy for you to measure progress against them. For example, it is not sufficient to state targets of “increase brand awareness” or “make a profit”; instead, you need to set firm targets such as “40% of consumers should associate Green Fingers Tools with garden sheds” or “make a profit of £100,000 on a turnover of £350,000 in the first year”.Measuring Progress
Progress against clear objectives such as these is easy to measure by using market research and the business’s financial figures.Profit isn’t the only yardstick for success, even in a business that has been set up primarily to make money. Perhaps it’s necessary to suffer a small loss while buying market share in order to ensure a more prosperous future. More generally, the metrics you choose to measure are not necessarily linear, and you must take this into account when comparing them against your target figures.
Individual aspects of your business can be measured separately. For example, the efficacy of a marketing campaign may be judged on its own terms: perhaps it was designed to build brand awareness, rather than being expected to have an immediate impact on the profitability of the company.
