How to Measure Success
Regardless of the size of your business, ensuring that it's successfully or not is important to calculate the feasibility of it's future, or just a look at how effective it is - do process need to be changed for example. Success can be measured in a number of a different ways, and it's important to remember that what success means for one business, might not be the same for other business.
Success is often measured by targets set by management, but these could be on a number of different factors within in a business. For example:
- A small high street store may used it's daily takings as a target and measurement of success. IT could aim to take £2,000 per week. This could be it's breakeven point, or a comfortable limit.
- A medium sized business with 5 outlets may set targets of sales for each outlet. If this was a chain of coffee shops for example, they may aim to sell x cups of coffee per week, per outlet.
- A large retail outlet with over 500 stores nationwide would have much bigger targets, and chances are they will have multiple targets too. They could set targets for the number of items sold and the money taken daily.
But because these are targets and you know what you're working towards, that doesn't necessarily define success. In example a, a shop could be taking £2,000 weekly to break even - but does breaking even mean the business is successful?
Each figure has to be looked at in context. For a business in it's first year, breaking even could mean it is successful. But for a business in year 5, this may not be as successful - unless it's been making a loss until that point.
Many people understand that targets are a good way to monitor your success because they're measureable. But setting targets can be tricky. There are a few things for you to consider when setting targets:
- Do seasons influence your sales? For example, if you're a toy shop, Christmas will likely see a higher demand for your business
- Are there any legislation changes upcoming? A change in tax laws for example, could see a boost for accountants or tax advisors. A change in Health & Safety laws could see an increase in sales for new equipment
- Are you launching a new product? If you've marketed it well, you could see sales increase
- What were your sales/turnover like this time last year? Could this be repeated again?
- Are you hosting an event, or launching a new web site? It could increase awareness of your brand
But remember: each business is different.
Types of Targets
So you've decided that setting targets are a good way to monitor how things are going. But what could your targets be?
- Customer numbers: A growing customer base could show that you're brand awareness is going or your marketing campaign could be working. This could show you that the time and money you've invested in your money is paying off
- Profit/Turnover: If you're a new business, it may take some time before a profit is seen, but an increase in turnover is a sure sign that things are heading in the right direction. It's great to see money coming into the business, but even turnover has be considered in comparison to your profit. If you're lack of profit is due to large start up costs, hopefully your loss will slowly decrease and profit increase. However, if you are seeing that month on month you are making it a loss, even with increased turnover, it may be time to re-think and reposition things
- Feedback: If you are using a feedback scheme, ensuring it's positive feedback coming back to you shows your business is on the right tracks. Being able to maintain the level of service that produces the positive feedback along with growth can be a challenge, but it could help you keep your eye on the ball.
- Market position: Being a big fish in a small pond is often much better than being a small fish in a big pond. This would require keeping a track on your local competition which can be tricky, but seeing your business moving in the right direction while things decrease for your competition could show signs of brand loyalty and that you're doing things right.
Are you a success?
We've merely touched on a few points of success of a business, mainly because every business is different. Take a look at your business, look at it in context of setting targets, and measure yourself. This may require a bit of manual work but it could surely help you ensure you're business is heading in the right direction to be successful.
- 15 Dec 2017 - Restoring a Dissolved Company
- 11 Dec 2017 - What are the Memorandum and Articles of Association?
- 30 Nov 2017 - An Introduction to Money Laundering Regulations
- 23 Nov 2017 - Mistakes to Avoid by Companies During Expansion
- 20 Nov 2017 - What is an unlimited company?