Running a business involves reviewing a lot of numbers; the majority of which have dollar signs attached to them. It stands to reason that most business owners, CFOs and finance managers don’t mind this task when business is booming; after all, who doesn’t like good news in the form of dollar signs? While it’s easy to become consumed with looking at cash flow, sales, and input and output as the main indicators of business success, there are other important KPIs to consider that don’t involve looking at the balance sheet.
Here are three ways of measuring business success that are not finance-focused.
Review Your Customer Base
How many customers and/or clients does your business have? Has this number gone up year-over-year? Your customer base is one area that can provide clues to measuring your success. While this is a numbers-focused exercise, rather than looking at how much money they give to your business, you’re interested in the number of customers/clients who choose your business.
In this case, indicators of success may include an increase in the overall number of customers. Look for both spikes in customers as well as how your customer base has grown over time. Does your business have customers who have been there since day one? Customer loyalty tells you that you’ve been consistently providing good products and/or services, as well as good customer service. Customer turnover may indicate a decline in customer satisfaction, a disconnect between what you are selling and what you deliver, or a decrease in overall market demand. In any case, this information can help you identify potential weaknesses and opportunities for growth.
Review Employee and Engagement
Is your staff happy and engaged with the company? The success of a company is influenced by its work force. Try looking beyond how much revenue employees generate and instead focus on their level of engagement as a reflection of your company’s success. Does your company regularly check-in with employees to see if everyone is on the same page? Do your employees understand their role and how their contributions help to better the company?
More engaged employees are more productive and more profitable. A company that isn’t performing too well may have a lot of disengaged employees as they feel like they are working on a sinking ship. On average, disengaged employees waste from 3o minutes to more than two hours each day on the job (Source: Salary.com). That time is spent doing personal work, taking long lunches, surfing the web and socializing – all indicators that they’re not engaged. High engagement levels on the other hand, provide some insight that your employees are aligned with the company’s mission and that things are on the up and up. In fact, companies that have nine engaged employees for every one that is disengaged - have 147% percent higher earnings per share than their competitors.( Source: Gallup's Q12 employee engagement assessment).
Review Company Mission and Goals
Has your company stayed on track with its initial mission? Again, without paying too much attention to the monetary value of your products and/or services, review what your company currently offers to its customers or clients. Has the company remained faithful to the original mission or has it veered of in a completely different direction? Straying from the company’s mission isn’t necessarily a bad thing; it may mean that the business has weathered market factors and changed course to meet evolving demands. Occasionally reviewing your company’s mission helps keep you connected to the business as well as realign your efforts with your overall business objectives.
Looking at your company goals is another way to gauge success. Again we aren’t talking about monetary goals (i.e. you are planning for $3 million in sales this year), but rather, reviewing the more holistic goals your company has identified. Have you made an impact on the community? Have you succeeded in helping customers with their needs? Have you established yourself among your competitors within the industry? All of these factors point to a level of success that cannot directly be measured by revenue.
