For many entrepreneurs, knowing how to measure small business success can be difficult. This is due to a multitude of factors. By and large, entrepreneurs tend to be people with great ideas and complex visions – a combination that doesn’t mesh well with the realities of running a small business – who often have yet to realize their true potential and are more concerned with the day-to-day process of staying alive and gathering funding.
Nevertheless, knowing how to measure small business success is a crucial skill for entrepreneurs to acquire. So, our team here at HJR Global have come up with some landmarks that you can use to measure the success of your small business.
Look For Inspiration From Your Peers
When we write peers, what we mean is “entrepreneurs.” Often, looking at other entrepreneurs – whether they’re in the same niche as you or a different one – and examining how they define small business success can help you both gauge your business’s wellbeing and simultaneously defeat the imposter syndrome so many entrepreneurs struggle with.
For example, according to Virgin Empire founder Sir Richard Branson, success is about being “actively and practically engaged.” What does engagement mean for you? Does it mean you regularly talk with your employees and know them all by name, or does it mean that you’re intimately involved in handling everything budgeting and infrastructure – or even, a combination of both?
By looking at how other successful individuals define success and then brainstorming on how you can make those definitions apply to your own small business, you can take in new ideas, increase your confidence and critical thinking abilities, and measure the success of your business all at the same time.
Jonathan Bennett, a fantastic entrepreneur and the founder of The Popular Man, stated that he defines success by being able to break free from the rat race while working hard and doing something you love.
One of the reasons why we love this take on small business success is because it encourages entrepreneurs to put things into perspective. As an entrepreneur, you probably created your business because you wanted to do something you love full time. Take a minute to appreciate the fact that you’re on the way towards realizing that goal. The first step in measuring the success of your business comes through acknowledging all of the success that you’ve achieved so far along the way. If you want to check out other great quotes from entrepreneurs, Business News Daily has a great selection that you can access by clicking here.
Keep Your Eye On The Moneyball
While chances are money only plays a supporting role in why you chose to establish a business, money is realistically the star actor in the oftentimes-drama-sometimes-comedy that is keeping your small business chugging along and climbing upwards. To this end, try to avoid delegating handling income statements, balance sheets and cash flow statements out to your employees. Even if you do work with a financial advisor- which we do suggest, particularly at the end of fiscal quarters and years – you should be able to read all of that material over yourself and understand it. It’s worth noting that dipping into the red isn’t always a sign that you’re in danger – especially if you’re in an industry that expects it such as retail, or one that relies heavily on seasonal success such as the hospitality industry.
However, if you notice that your company is consistently spending more than it can earn (or raise back), it’s time to take a long, hard look at your business plan. While some entrepreneurs have had success operating at a loss for extended periods of time – Jeff Bezos, for example, is famous for operating Amazon at a loss for its first nine years – we can’t recommend it. Unless you have a plan for world domination like Bezos and Amazon, we suggest looking at how you can reduce costs if you notice you’re consistently operating at a loss.
Other than just income statements, we suggest looking at your sales numbers, the number of hits on your website and social media pages, and the number of visits to your store, amongst other things. This data can give you invaluable information. For example, if you have a year-round business plan but notice that people seem to purchase most of your products around the holidays, you can probably cut a significant chunk out of your summer marketing campaign and still be successful.
Think About What Matters To You
At the end of the day, you’re an entrepreneur because you had a vision, and now you’re working to make that vision become a reality. Given that, how would you define small business success? We suggest coming up with a list of “milestones” (first prototype, first production, first sale, first million dollars in revenue, etc.) and keeping track of those landmarks as you hit them.
You can also measure your success by your lifestyle. Importantly, this doesn’t mean that once you’ve bought yourself a Ferrari, you’ve made it. It means that you should love what you’re doing because you’re the reason for doing it. Stress comes with the job for entrepreneurs, but if you’re constantly feeling unhappy, maybe it’s time to re-evaluate your goals. Successful entrepreneurs start their businesses to solve a problem. Is your business solving the problem it set out to fix? Look at customer reviews and ratings. Not only will working towards customer satisfaction help guarantee success, but it will also make you feel better once you realize you’re giving back.
Think About What Matters To Your Employees
This will be a short one, but give a survey to your employees. Do they enjoy their jobs? Now, do they really? Monitoring employee satisfaction is a great way to measure your small business success. Your employees will work harder for a business and a vision they can believe in themselves, and as a result, will drive in more revenue the happier they are. Try not to forget that the people working for you probably dream about doing the exact same thing you are. Don’t lose your humanity towards your business and your vision, and you’ll be well on your way towards success.
In the end, no matter how you choose to define your success, what’s important is consistency. If you’re not able to regularly monitor whether or not your business is successful, then there’s not really a point to defining success in the first place. So, establish how you can measure success and review your results regularly.
Are you an entrepreneur struggling with your business plan or funding? We’d love to help! Here at HJR Global, we work closely with entrepreneurs and small businesses to help them realize their visions, whether that’s through financial consulting or helping you fund your next project. To learn more about what we can do for you, click here.
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