Aside from data analysts, there are few people who like to read numbers and understand them. As an entrepreneur and business owner, I believe metrics should guide every decision. As a young entrepreneur, though, I also understand how difficult it is to really find the right metrics to help you make the right decisions for the future of your company.
While our company has been in business for a decade now, it took me several years to really understand what metrics were important to diagnosing the actual health of our company. Just like doctors can perform a general checkup on patients to ensure a general healthy status, entrepreneurs need to learn to read their company's pulse to ensure a clean bill of health.
Specifically, entrepreneurs should focus on high-level metrics that indicate strong, positive growth. These include revenue, growth and client metrics. Here's how you can measure each:
An easy way to know if your company is moving in the right direction is by having a clear understanding of revenue metrics. Is your company growing year-over-year or month-over-month? These numbers are critical to developing annual projections for growth and drive a variety of other decisions, including staffing and compensations.
When I first started my business, I was too consumed by the day-to-day that I didn't make time to look at the bigger picture. Today, I am constantly looking over numbers to ensure I have a clear picture of the overall financial health of the company. Keep a close eye on them to prevent costly decisions. Whether your business is best measured on a monthly, quarterly or annual basis, it's important to constantly keep these numbers in mind.
Growth is paramount to long-term success for any business. As a CEO, keeping your finger on growth metrics is essential to driving and maintaining a positive, healthy growth. Knowing the cost of acquiring a new customer and the value that customer brings to your business is the first step towards understanding if your company is on a path to positive growth.
This is often a hard metric for young entrepreneurs to swallow. From my personal experience, the cost of acquisition is often of no importance when you are just starting out. While this may be okay for a few months or even a year, at some point in time, you have to truly know if you're growing in a healthy and scalable manner. Just because you're bringing in more customers doesn't necessarily mean you're making more money. Mapping out a growth plan can help you determine the path you need to take to see the growth you're looking for.
When revenue and growth metrics are hitting the mark, it may seem like there is nowhere to go but up. However, keeping your customers happy and satisfied is just as important. No matter how big or small your company may be, every business owner should keep customers top of mind. If you're not sending out frequent surveys to get feedback from your clients or if you're not getting frequent referrals from existing clients, you might be missing the mark on keeping your clients happy.
As a company, we know we're doing something right when existing clients refer new business to us. Not only does that mean they're happy with our job, but they have faith that we'll do the same for their referrals. If you haven't yet instituted a client feedback program, it's time you consider doing so. Thanks to a feedback program our company implemented, we're able to get valuable feedback from customers that has helped shaped many of the processes our company follows today. After all, if what we do isn't making our clients happy, then we shouldn't be doing it!
As an entrepreneur trying to grow your business, it's challenging to know how well your business is doing in all areas. Your business has so many moving parts that knowing how each part is doing -- at all times -- is simply impossible. Keeping a pulse on your company requires that you keep key metrics in mind, including revenue, growth and client metrics. Combined, these metrics will tell you if your company has a clean bill of health.