About 20% of small businesses fail in their first year. But don’t get too confident because another 50% would fail in their fifth year, according to the Bureau of Labor Statistics. Understanding where your business is currently at is important to gauge where it is headed and strategize smartly. One critical question you should be able to answer now, whether you’ve just been operating for a few months or a few years, is whether your company is actually growing.
So how do you measure business success?
There are many ways to quantify success. They include the following:
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 Bryon 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 making consumers buy. When people have become familiar with the distinctive qualities of your product or brand, you’ve done a pretty good job.
You’re Gaining Profits
One of the most obvious measures of success is profitability. If you are earning more than what you are spending to operate and sustain your small business, you are succeeding. Reinvesting in your business by using a percentage of your company’s profit is another factor that shows you have gained profit to invest. Also, some company owners make another decision to reinvest in the company, somehow they use personal loans to reinvest in the company instead of using the company’s profit.
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
As a response to the COVID-19 outbreak, Potential.com is offering individuals free access to our future skills library (20+ Courses) to support you during the COVID outbreak. It’s your chance to learn essential skills to help you prepare for future jobs. Register now for free using your details and coupon code: potentialreader.
Maybe you’re not seeing significant increases in your earnings. However, you expand your business, you also take a business cash advance to double your production. You probably will hire 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.
Your Employees are Doing Really Well
Did you know that talent scarcity is real? So if you have a pretty awesome team working for you, you know you’ve reached a certain milestone in your business. One of your greatest resources is your employees. When you have well-trained, high-performing people in your team, you can achieve greater milestones and achieve business success easily.
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.
You’ve Reached the Expectations in the Market
For your brand to be successful, you need to understand what people (especially your target market) want. 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 your meeting the expectations of your customers, you’ve reached a good amount of success.
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 competing brands. It’s basically establishing an image or identity so that people perceive your brand in a different way.
Your Employees are Satisfied
Your employees are your internal customers. Thus, you should look after your employees’ happiness and satisfaction too. When your employees are happy, you don’t need to do much to make them productive and obtain their commitment.
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, from organizational ethics to 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.