Monday, November 20, 2017
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The Business Indicator: A Guide to Measuring your Business

 

Written by: Sulay Shah
Edited by: Cheryl Chen

 

When running a small business, it can be a challenge to stay  on top of basic tasks let alone managing all the things required behind the scenes. Regardless of the long list of to-dos, dedicating time to measure the state of a business can be both beneficial to the company and rewarding for the owner. It can help entrepreneurs work more effectively and visualize  potential new opportunities that are essential for a company’s growth.

There are basic guidelines that should be followed when measuring the effectiveness of a company. Below are a list of categories your emerging business should analyze to ensure proper growth and success.

 

Time Management

Many companies in the service industry charge their clients through an hourly or daily system. These individuals are consistently tracking their time to ensure that they are compensated for the amount of work they perform. That being said, monitoring your time is nonetheless a useful habit to practice even if you are not involved in this method of billing.

By tracking  administrative hours, and other non-billable tasks, you are able to record exactly how much non-rewarded time is spent on your business. Most often, this value  is beyond what is expected.  If your business offers a range of services, you can also identify which areas are most profitable. By determining areas of most profit, entrepreneurs can pivot their company to pay more attention to more profitable areas. Making a number of influential and making a few changes can considerably improve profit margins as well as overall efficiency.

 

Financial Position

Calculating the profit margin of a company is important to determine which products or services are most profitable, especially in  small businesses. By understanding which projects are most popular and which target market is most appealing, companies can use the information to further establish and grow the business. Make sure you stay on top of business accounts and look regularly at the overall financial position of a business.  Remember to constantly check the cash flow, profitability, tax credits,  and bank balances. It is also beneficial to the company to cut all unnecessary expenses to improve profit margins.

Not regularly checking a company’s financial position will risk the potential of owners not understanding the true performance of the business. This can lead to confusions regarding the cash flow and profit margins of your business. Any unidentified problems are threatening to your company’s growth and success.

 

Social media

If a business uses Facebook, Twitter, or other forms of social media for business, it is crucial to measure the effect that these channels have on engaging customers and promoting the company. Other than the overall effectiveness, there are many other important metrics to consider when it comes to social media. It is also essential to examine how each individual post is actually performing, particularly how followers engage with those posts.

Effective social media management tools  enables you to tailor future social media activity and ensure that it is performing at maximum efficiency. Using  social media platforms such as Instagram, Pinterest, and LinkedIn can be an excellent method of promotion if used correctly.

 

Customer satisfaction

Expanding your customer base is an important way to grow your business however, it is equally important to make sure existing customers are satisfied. Giving customers a bad experience can be harmful to the  company and brand. Customers with poor impressions of your brand will  avoid using your products or services again. This negative review wills be spread to their friends and family through word of mouth, causing serious harm to the business.

Due to the importance of customer satisfaction, businesses must understand how customers feel about the products  and whether they would recommend the brand to others. Conducting  a survey among your customer base is an excellent method of testing customer satisfaction. There are also  other mediums such as social media platforms that are popular in conducting online polls and asking for consumer feedback regarding your business.

 

Staff morale

To maintain customer satisfactions, it is very important that your staff is ethical and maintain high morale. Research suggests that high morale amongst employees can increase productivity therefore, it is necessary to regularly survey your employees and measure their responses.

Are your employees satisfied with their jobs and the business they work for? Consistently monitor if there are areas which can be improved to make your staff more satisfied with their job. Using this knowledge, you are able to deal with morale-decreasing problems that may occur.

Management should prioritize maintaining an ethical work environment that values employee rights, fair procedures, and equity in pay and promotion. Working environments should also promote tolerance, compassion, loyalty and honesty in the treatment of customers and employees.

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