As an entrepreneur, you need to regularly measure your business performance. Business is inconstant, you can count on that everything continuously changes. So, how do you measure small business performance?
Measuring Business Performance
Here are just a few plans and methods of measuring business performance at your company:
1. Business’s Financial Statements
Money is crucial when you run a business. Without it, your business is done. With it, you can grow your business and extend.
The three main financial statements you can use at your small business are the income statement, balance sheet, and cash flow statement.
The income statement measures the profitability of your business during a certain period by showing your business’s profits and losses. The balance sheet shows your business’s financial strength, measuring how much you owe and own. And, the cash flow statement shows liquid cash is at your business.
2. Check Customer Satisfaction
One significant measurement of small business performance is customer satisfaction. If your customers aren’t pleased after buying from your business, they apparently won’t do it again.
How do you measure customer satisfaction? There are a few different ways, including surveys, reviews.
Customers help us develop our products. Learn how to settle their needs by listening to them.
3. Average New Customers You Get
See if the people purchasing from your business are existing customers. Develop a client list with email addresses to track customers. That way, you can easily count the number of new customers per month or year.
By averaging your new customers every so often, you can measure how successful your business is at drawing in new people.
4. Do a Checkup on Your Mailing List
If you have a strong open rate but a below-average conversion rate, you probably need to do some A/B testing to figure out how you can improve to better serve your business.
5. Revenue growth rate
Revenue growth is the rate at which a company’s income, or sales, is increasing. To find a revenue growth rate, begin with your business’s total revenue for the current year. Then, divide current income by total revenue from the previous year to find the rate of growth. Now, you can evaluate whether growth is increasing or decreasing.
6. Accounts payable turnover
Accounts payable turnover is a measure of the rate at which your business pays for goods and services in a given period. Once you know how much you pay on suppliers, you can decide if you need to take steps to reduce spending.
7. Relative market share
The relative market share shows you how much of a given market your company controls. The market share shows how a company is performing relative to its competitors. Once you assess your relative market share, you can make strategic improvements to your product and service to improve long-term profitability for your business.
8. Conduct Performance Reviews
Try to conduct performance reviews twice a year. This shows how effectively they complete tasks. Performance reports help employees see what they need to improve and gives insight into their workload.
You can then assign duties to the employee to make them increase workplace productivity without increasing the number of workers on the payroll.