Self-awareness is a goal, but it only comes from a whole lot of practice — that’s why you’ll probably be asking someone else, “How do I look in this shirt?” for the rest of your life.
And that’s totally OK; soliciting trusted perspectives works for assessing company success, but luckily, you can rely on some concrete metrics, too. So how does this business growth look on you? Listen to the wisdom of the pros, and let these metrics be your mirror.
Before you jump in to assessing your company’s success, it helps to remember that business growth happens in stages. Knowing what these stages are is a useful way to break down your journey when you’re looking to gauge results. Harvard Business Review breaks down the five stages as the following:
Stage 1: Existence, the operable phase of a business
Stage 2: Survival, wherein a company demonstrates a workable relationship between revenues and expenses
Stage 3: Success, usually measured in economic health
Stage 4: Take-off, in which the business uses economic health to finance growth and effectively delegates new responsibilities
Stage 5: Resource maturity, when a company has the staff and finances to engage in detailed operational and strategic planning (often characterized by decentralized management, experience, and adequate staff)
“I’m convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.” — Steve Jobs, former CEO, Apple
When it comes to defining company success, assessing your finances gets the most lip service for obvious reasons. Per Indeed, you can get that total revenue growth figure easily with this formula: [(current period revenue minus previous same period revenue) / previous same period revenue] x 100. But in addition to calculating your revenue, don’t neglect these other financially facing metrics for successful businesses, as Act! reminds us:
Profit: While revenue is income generated, profit often grants a more nuanced perspective on company success, as it calculates the amount of income after accounting for expenses, debts, and operating costs, plus any additional income streams.
Sales: Just like it sounds; increased sales typically indicate increased growth (but do remember to account for big discounts or overtrading).
Sales growth year-to-date: Focusing too much on month-to-month measurements can be a bit of a pitfall. Scoro recommends monitoring yearly metrics for a wide view of sales revenue when all seasons are accounted for.
“Chase the vision, not the money; the money will end up following you.” — Tony Hsieh, former CEO, Zappos
An increase in customers is often an easily identifiable sign of growth, but it goes well beyond numbers. As Forbes notes, surveys, reviews, or even in-person inquiries can help you gauge your customers’ emotional experience. The customers’ sense of satisfaction filters into yet another essential metric for company success: customer retention. More customers are great, but returning, reliable customers are often the deciding factor that makes a company not just successful, but sustainable.
Likewise, the cost of customer acquisition (or CAC) can be a useful calculation here. You can get this stat by dividing the cost spent on acquiring new customers (i.e., your business’ marketing expenses) by the number of new clients you’ve gained in a specific period of time. Lead-to-client conversion rates and the number of qualified leads per month also factor into company growth (SetSchedule 3.0’s Referral Radar can help out in that department, too).
“We pride ourselves on excellent customer satisfaction. We are all about reviews and making sure that our customers are happy [...] When we receive reviews, we post them on our company website. That way, others know what real people have to say about our products.” — Mike Kappel, CEO/founder, Patriot Software
Your business’ success lives or dies on the quality of your employees. Performance reviews are certainly a key tool in providing you with a clear and useful picture of employee success, and in turn company success. But don’t end the employee assessment there.
It’s vital to remember that employee quality is often closely tied to employee mental health, physical health, and contentment. Because happy employees are productive employees, happy employees are also a completely valid measure of company success — so check in on them often, in both official, survey-like capacities and in the day-to-day interactions within your company. Flexing to help serve your employees is a success in its own right, and more than that, taking care of your employees isn’t just a way to encourage growth, it’s the right and responsible thing to do.
“Power should be reserved for weightlifting and boats, and leadership really involves responsibility.”
— Mary Barra, CEO, General Motors
If you want Harvard Business Review’s take on things, companies should spend a lot more time measuring their share of growth, not just their market share. This more granular metric divides each vendor’s increase in units by the overall market’s increase. The idea here is that share of growth helps you identify which parts — and which people — among your business are growing faster than others. Because of the one-size-fits-all nature of assessing old-school market share, measuring your share of growth can give you a clearer picture of success across markets of all sizes and help you invest in the parts of your business that are working, rather than pouring money into fixing what isn’t.
“The most important thing to do if you find yourself in a hole is to stop digging.” — Warren Buffett, CEO, Berkshire Hathaway
Remember that largely successful companies are, in essence, a collection of little successes. Increased website traffic and online visibility? That’s a success. The meeting or a milestone you set for the quarter? That’s a success. Having a growth strategy to reach those company success goals is necessary, but celebrating the little victories along the way is just as important.
As a freelance writer, small business owner, and consultant with more than a decade of experience, Dan Ketchum has been fortunate enough to collaborate with leading brands including Chron.com, Zacks, MSN Money, Discover, Office Depot, Fortune, The Motley Fool, and more.
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Harvard Business Review - Why Companies Should Measure “Share of Growth,” Not Just Market Share
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