How diligent have you been in tracking your business metrics in 2023? Or when was the last time you made sure your business metrics are as effective as they could be?
Let’s take a step back, and remind ourselves what business metrics are, and why they’re so important to our business success.
In simple words, business metrics is the collection of relevant and meaningful business data that can help you make informed decisions to grow your business. Some people call it KPI (Key Performance Indicators) or analytics.
Tracking and making sense of data to arrive at a meaningful conclusion and an action plan is not exactly an easy job. But then, running a successful business was never supposed to be easy.
Here is a list of four (4) important metrics every business should keep track of in 2023 for successful business growth.
1. Cash Flow (Revenue & Expenses)
Cash is the lifeblood of the business – and hence one of the most critical aspects of performance management. Tracking Cashflow let businesses assess whether their sales and margins are appropriate, and are consequently one of the most important KPIs for any business to track.
A lot of businesses make huge revenues, but they actually come out in the red at the end of the year. Revenue is only part of the equation. You also have to consider your expenses and what will be left over in the business after-all is said and done.
Also Read: Small Business Owners & Freelancers! How Are You Managing Your Finances?
2. Cost Of Customer Acquisition
As a small business, you need customers to meet your sales forecast. You need to find these customers and persuade them to buy your product or service.
Customer acquisition cost is calculated by dividing total acquisition expenses by total new customers over a given period.
This is called customer acquisition and generally, it costs money. Advertising & Marketing costs are increasing day by day and investing in wrong marketing channel can badly affect profit margins of your business.
3. Customer Satisfaction & Loyalty
It is important to measure customer satisfaction and loyalty level for every business. You build customer loyalty by treating people how they want to be treated especially your high valued customers.
Customer satisfaction and loyalty are all about attracting the right customer, getting them to buy from, ensuring they are satisfied with their purchase and will in nearest future buy in higher quantities and bring you even more customers.
4. Operational Performance & Productivity
Measuring staff performance and productivity is an important metric to be tracked by most businesses. If you do not know how your staff is doing, then how can you truly know the inner workings of your own business?
Productivity ratios can be applied to almost any aspect of your business. For example, sales productivity is simply actual revenue divided by the number of sales people.
The process works the same for manufacturing productivity, marketing productivity, or support productivity. Compare your productivity to industry norms and check yourself for continuous improvement.
Also Read: 5 super effective ways to keep your team happy and motivated.
Conclusion
Tracking these important business metrics is important for a bunch of reasons, but probably the most important reason is the growth of your business. Instead of spending time tracking a lot of KPIs you can get better results by tracking these selected few.
What metrics do you as a business owner or as a business manager focus on? Are you part of a culture that is addicted to reams of reporting or is the focus more on analysis and results? Have you tried some or all of the above? Please share your tips, thoughts and success stories in the comment section below.