Tags: metrics | small | business | owner

5 Important Metrics Every Small-Business Owner Should Track

5 Important Metrics Every Small-Business Owner Should Track
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By    |   Monday, 19 February 2018 10:32 AM

Growth is the foundation on which every business success and failure is measured. I strongly believe that business in its entirety is a game of numbers and measurement is the core way of finding out how well the business is doing. This is why Peter Drucker always says what gets measured gets managed.

There are fundamental metrics that you should track as a small business owner in order to remain relevant in business. When these metrics are exposed, they will reveal the health of your business to you. Hence a clear analysis of the exposed truths will guide you properly in decision-making.

Here is a list of 5 important business metrics you should track as a small business owner.

1. Customer Acquisition costs (CAC)

Cost of customer acquisition is very important for business growth. It represents all the costs incurred by your company in order to turn a prospect into a customer. You can calculate it by dividing the total costs of all acquisitions by the number of new customers you got over a certain time.

Customers determine your sales, profit, expenses and cash flow. When you don’t know how you acquire them, you will hardly know how to keep them or effectively get new ones. Hence an understanding the site traffic, its source, and advertising conversion rate are critical.

Doing this will help you to know how you acquired your customers and how much it cost you to do it. That way, you can better target your advertisement and optimize your marketing campaigns with the techniques that work the best, at the best price.

Your customer acquisition costs will inevitably affect the bottom-line metrics, profit and return on investment: this is why you should always track the evolution of your CAC and choose the most viable marketing channels and campaigns.

2. Track Your Cash Flow

Finance is crucial in any business venture. Surprisingly as important as money is in business, most small business owners don’t know how to manage it. Taking a proper documentation of how money is handled is the first job every entrepreneur needs to master.

Financial metrics have to be known. Sales funnels have to be looked into. It’s by knowing how each funnel works that you understand which one brings in the money. Entrepreneurs who don’t pay attention to their money channels are short-circuiting their earning potentials. Making headway in business requires you to know your sales funnels, how they’re doing and how you can optimize and increase their conversions.

Go back and re-track each of your sales. Get software that tracks these metrics and follow up on each of them. There are numerous professional business dashboards to handle all your relevant financial and sales metrics.

To keep a healthy and viable financial situation, endeavor to track your costs and revenue streams in detail to spot any upcoming issue.

3. Customers Satisfaction

Yes, you need to track this and know how well you’re doing with customers’ issues and how workable your solutions are. How you handle your customers shows how you handle your business. If you don’t re-evaluate your approach and progress with them, you may lose them.

Know your customers buying psychology; train your staff in that line, package your product to meet their expectations and create an enabling environment for sales. However, you cannot do all these if you don’t track how well you’re doing with them. To do so, you can use many customer-related metrics that will provide you with an in-depth understanding of how your customers perceive your products, services, and brand.

Customer satisfaction can be, in a first time, measured through a short feedback survey after a call or a purchase, answering a question like “how satisfied are you with our services?”, and a scale of answers (very satisfied, satisfied, neutral, not so and very unsatisfied).

You can also perform a Net Promoter Score (NPS) analysis to evaluate your “referral power”. Ask your customers the question “On a scale from 0 to 10, how likely would you recommend our brand?”, and classify the answers accordingly: 0 to 6 are detractors, 7-8 are neutrals, and 9-10 are promoters.

Your NPS will be calculated with the formula NPS= (Number of promoters – Number of detractors) / (Number of respondents) x 100.

Finally, monitoring the Customer Effort Score (CES) will be a good indicator concerning the general customer experience. It asks how easy it was for them to get what they wanted from your company: you can once again use a scale from 1 to 10, and calculate an average score. The idea is of course to maintain it as low as possible.

The happier they become the higher your business grows.

4. Operational Performance and Staff Loyalty

Business makes no sense if you have disgruntled and unhappy employees. Also, if you have inexperienced staff, your business may not achieve much. You need to know how your staff is doing at each point in time: know their challenges and strengths, this will show you how best to motivate them and make them more productive.

You will also need to check your business operational performance. This helps you to know if your customers and staff are responding to the nature and pattern of the business. If you are not making positive progress with the operational model you have, consider changing it.

5. Evaluate your Content Strategy

Content is everything in business. It’s what attracts your customers and keep them. Having a good understanding of your content and how it attracts and keep customers will enhance the chances of attracting more customers. Take note of your competitor’s contents. Learn what they do that gives them the results they have.

Businesses strive on the platform of principles. You can get inspiration from your competitors’ success principles. Check which form of content works best for your business. Track each of them and focus on the high-rise ones. Track how customers respond to each of your content because this is basically the core way to know how well your content is doing.

In conclusion, tracking your business metrics makes your brand more aware of processes that increase or kill revenue. The better you track your goals, the luckier you get at increasing your revenue.

Richard Agu is a researcher, entrepreneur and freelancer, passionate about entrepreneurship and self-development. Currently, Richard writes for Entrepreneur.com, Goodmenproject.com, among others. Follow him on Linkedin.com by clicking here now.

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RichardAgu
Growth is the foundation on which every business success and failure is measured. I strongly believe that business in its entirety is a game of numbers and measurement is the core way of finding out how well the business is doing. This is why Peter Drucker always says what...
metrics, small, business, owner
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2018-32-19
Monday, 19 February 2018 10:32 AM
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