How to measure the success of your small business?

Every business has the multi-dimensional aspects associated with it which determines its growth trajectory. One can measure the success of one’s small business if s/he understands the variables responsible for its growth. 

Let us understand these variables:

1. Profit Margins are Increasing

When you start the online business, you do some investment like purchasing a laptop, buying a domain for the website or the online store to showcase your designed products. Although the investment is one-time cost for some time duration but in addition to this, you need money to cover your daily or the monthly expenses like rent, internet bill, electricity bill, meeting clients, and other commuting expenses, etc. If the difference between your income and the daily expenses is reducing with time, it means that you are approaching the profit. If your income exceeds your current expenses then it means that you are making a profit. The extent of excess income w.r.t the current expenses determine the growth in your profit margins. Higher growth means you are making more profit. And if your profit margins get stagnated in this initial phase then it means that something is wrong in your strategy which needs to be sorted out quickly otherwise this stagnation will lead to the collapse.

2. Reputation

It is the belief that people are having about your business. When people hear about your business, the picture comes thereafter in their mind is the glance of your reputation. Profit doesn’t derive reputation rather the profits depend on your reputation. If people see the elements of integrity, fairness, quality, and discipline in your business. They start trusting your brand and you build a good reputation in their minds, leading to the growth of the business. Remember, your reputation starts building as soon as you interact with your first client. So, never give bombastic expectations to him which you cannot fill in the future. Be realistic, explain all the features of your product or the service and tell him how your product can be an added advantage in comparison to the others in the market. 

3. Brand Awareness

It is the extent by which the potential customers are able to recognize your brand or products. As the completion is intense therefore extensive marketing is required in first few years of starting the business. Your start-up name and the product features should be like that it attracts the attention of the people and they are able to recall your brand. If people are inquiring more about your business that means that the people are getting more aware of your brand. If more people are inquiring month after month through e-mails, telephones or personally, it means that you are growing as an entrepreneur. An increasing subscriber’s list of your online business is the healthy indicator and represents the growth of your small business.

4. Market Penetration

It is the extent to which your product is bought and recognized by the target audiences. It determines the market share of your business in that specific segment. The market penetration can be horizontally or vertically or both. Let me explain it with the help of an example, you are based in Delhi (India) and are running an online store which sells clothes to the teenagers. If more and more teenagers are buying your products from Delhi, it means you are penetrating vertically deep into the Delhi market. For instance, you start receiving sales from another region say teenagers based in London, it is called the horizontal penetration of your products. Both types of penetration tell the popularity of your brand and is a sign of the growth of your start-up.

5. Integration

Integration is the process of combining two or more businesses with mutual understanding for their mutual benefits. Generally, these businesses have a common understanding and values. For example, you are running a blog which provides great information to the small entrepreneurs. You want a business partner with whom you share the same values and also help both of you in generating the revenue. I am talking about affiliate marketing in which you can paste the banners of the companies once approved by them. When someone clicks on the banners and buys their products, both parties earn some income. Well, the quality of integration depends upon the quality of your blog. If your blog contains good content then there are high chances that good companies may approach you for affiliate marketing. As they know that good content always drives traffic and placing ads in between the content have high chances of conversion. 

6. Your Customers are Happy

If you are receiving positive feedback from your customers, indicating that they are happy with your product and the service and it is obviously a very good sign for your business. Happy customers can help your business growing in 2 ways. First, you can capitalize on their positive feedback and publish in your blog or website. It will help in attracting fresh clients as positive reviews about the product give the sense of trust and comfort in their mind which leads to conversion.
The small entrepreneurs must be knowing that it is time-consuming and costly to acquire a new client in comparison to retain the existing client. If your existing customers are happy with your first product then you can sell the second product without many efforts.

7. Your Employees are Happy and Performing

It is very important that the employees are happy working in your start-up. Your employees are happy if:

• The vision and mission of your start-up is clear in their minds
• The employees are suitably qualified for the job (neither over nor under qualified). The over-qualification leads to dissatisfaction in the employee while under qualified employee is not good for your small business
• They are getting training about the product regularly
• The business practices are fair and transparent
• They can see their career growth in your start-up
• They are given an opportunity to share their ideas
• They are compensated fairly and in time

Conclusion

​Analyse all the above metrics and give points to your start-up on a scale of 10. Anything below 7 needs serious considerations and immediate corrective steps should be taken to keep your small business growing and flourishing.