You’ve just started your own business. A year is under your belt and things are good, steady, and growing. It’s tough to keep track of every single detail, but your investors want to get a sense of a ROI and what’s to come in the next year, and suddenly the questions start piling up with no answers.
Metrics can be seen as mostly binary statistics, spreadsheets of numbers and pie charts and infographics galore, but what can be overlooked is the impact it has on both your customer base and your employees. With that said, here are some things to keep an eye on as your business continues to grow.
This is an easy one, but more complex than you initially think. Growing numbers are great but in order to get the full picture, businesses needs a cross-section of the data.
Some of the factors that go into sales data are the correlations to ad campaigns, competitive actions, price changes, seasonal forces, and other cost of sales. If you’re really looking to dig deep, take a dive into Asset Turnover Ratios, Return on Sales, and Return on Assets. These can tell you how your company’s performance matches up to others in the industry.
Profits or Losses Per Month
Profits are a complicated number. It isn’t as simple as finding the difference between the costs of what you sell for what price. Your math has to include the fixed and variable costs of operation, like rent or mortgage payments, state, federal and local taxes, utilities, insurance, and the salary you may or (may not) be taking.
The cost of operation is always the biggest Rubik’s Cube for businesses to solve. Beyond that, the biggest identifier for profit is usually the price you can charge for your product or service. This amount, over the base cost of an item, is your “markup,” and the difference between cost and price is the “margin.” You’ll want to shoot for margins below 60% if you’re looking to grow.
Customer Loyalty & Retention
Customers are king, and keeping them away from competitors and keeping them happy should be a huge priority for businesses. That should go without saying of course, but getting them to buy, buy often, buy in higher quantities and bring you even more customers should be at the forefront of every strategic meeting your company has from here on out. It doesn’t matter what industry your business belongs to, it has to be in the hospitality business. Companies that successfully keep customers and grow consistently are adept at everything from knowing their customers inclinations, communicating often, providing high quality customer service, and keeping products up to date and easy to operate.
Keeping a steady but unobtrusive communication with your customers is fairly straightforward. You can use customer surveys, direct feedback at point of purchase, and purchase analysis. These, like all methods, should be rigorously tested and systematic.
Keeping track of your overhead, or fixed costs that are independent on the goods or services produced by the business, such as monthly salaries or rents, is monumentally important if not properly looked after.
By tracking them on a monthly basis, you will be able to see more clearly where spending happens. This information is vital to updating your business plan and putting together a yearly budget. Looking at factors such as finding a more cost effective utility supplier, or shipping & manufacturing partner, or business location can greatly reduce your overhead and help your profit margin.
You need to keep metrics on total labor hours for various functions. No matter how big or small your company is, measuring labor and efficiency will be the most important and sometimes most expensive factor in a company’s forward progress. Change is an ever present part of life and business, and as a small company, you need to be constantly tweaking how you operate to maximize efficiency.
Using your latest data and company analytics can help you discover new opportunities to better your business functions.
Keeping a close tabs on employees’ satisfaction and general happiness is crucial to productivity. There’s a saying in restaurants that angry cooks make angry food, and that can be applied to just about every other good or service. From the CEO to the customer service representative, a company’s commitment to its employees will provide better results.
With high satisfaction rates, your employees will not only work harder for something they truly believe in but stay with the company for a longer period of time. Short term solutions are implementing perks like unlimited snacks, coffee, team lunches, etc. But thinking long term, companies should be investing in team-building activities, employee development and other motivational, enrichment methods.
Keeping track of your metrics not only measures your improvement, but signifies a deep commitment to a culture of success that permeates your company.