Most small business owners understand that measuring key performance indicators (KPI) is essential to determine how well they are doing with business growth. However, they often feel less clear about deciding what they should include as a KPI. Business owners must consider several unique factors about their company such as whether it operates primarily online. After establishing criteria to use for KPIs, businesses can benefit from applying the principles outlined below when measuring business growth.
Demand for Products or Services
One of the easiest ways to determine business growth is to look at whether its base of customers is increasing or decreasing. Achieving success in attracting and keeping customers requires hard work such as knowing what they want even before they do and finding ways to deliver it that stand out from the competition. Of course, no business can read the mind of its customers. Management will need to cultivate feedback from them in the form of surveys, comment cards, reviews, and other ways of finding out just what customers are thinking.
A company that sells inventory almost faster than it can order it is in a good place in terms of business growth. A good KPI to implement would be to determine a percentage of turnover for inventory. Even when the number is a high, company leadership must resist the urge to feel satisfied with the status quo and continue to surpass customer expectations.
A Healthy Profit and Loss Statement
Business profit is the amount of revenue the company claims after deducting expenses such as payroll, equipment, taxes, and other common costs. Obviously, the primary goal with business growth is to earn as much of a profit as possible. To determine profit and loss, an accounting professional will need to obtain a balance sheet, cash flow statement, income statements, and other financial documents and assess them for vital information.
The above are just three ways to measure business growth. Please schedule an appointment with Purevue Capital if you would like additional guidance.