[This article was written by Emma Sturgis.]
As an entrepreneur, getting your business off the ground is not a walk in the park. Even after investing your time and money, you need to know whether your efforts are paying off. It is daunting to tell whether a business is successive without measuring progress. So how can you measure progress in a startup?
The answer is pretty simple: everything revolves around numbers. Continually measuring the number of new customers, revenue, and data can put your business on the path towards success.
Here are several ways to measure progress in your startup.
Pay Keen Attention to Customer Feedback
Numerous entrepreneurs think that revenues are the only metric to measure the success of a business. Another way to tell whether your business is doing well is by listening to customer feedback. If you are getting overwhelmingly positive feedback from customers, that’s an indication that your business is making a great impact on your customers’ lives.
How to collect feedback depends on the nature of your business. You can collect feedback by word of mouth, online reviews, or focus groups, among others.
Money is the most significant measure of business success. However, it is not all about focusing on your monthly profits. Instead, you should consider three different financial statements; your balance sheet, income statement, and cash flow statement.
Have a look at your income statement to measure business profitability over a given period. The statement allows you to analyze the money coming in and going out of your business.
On the other hand, a balance sheet allows you to view your startup from a broader perspective. This statement details assets owned by your business and any outstanding debt. A balance sheet is pivotal to analyze the sustainability of your business in the near future.
A cash flow statement shows the amount of liquid cash in your business. You might have made huge profits in the past quarter, but you will not have money to reinvest if that money is not yet paid. Consider using cloud accounting software to record your business finances.
Employees are the most crucial resource in a business. If you have intrinsically motivated employees, your business will definitely make a difference. Continuously conduct performance reviews to ensure your business is on the right track. Additionally, take time to create a unique and motivating company culture. Your team keeps the train running; thus, it’s prudent to examine it closely.
Measuring your startup success helps you to set realistic goals.