Most common measurements
A business owner or manager needs information to manage a business – this information is reported in numbers. These are the most common measurements.
Sales verses target
Most businesses set financial targets for the year ahead and track their progress. The forecast starts with sales and are linked to marketing spend and sales people. This way you can see what’s working and what’s not, so you to make decisions on all sorted of thing including marketing tactics, training, funding, recruitment and equipment.
But, unless your business is very predictable the forecast and targets are just your best guess which is why we recommend monthly or at least quarterly reviews.
A combination of Google Docs and Xero.com budgeting feature can be used. Or, you can use systems like LivePlan.com which make planning and budgeting very easy.
You can track growth in terms of number of customers, sales and/or average spend month-by-month or by comparing quarters or years.
Once again, accounting systems like Xero.com enable you to track these numbers.
Profit is not always the priority – it depends on your stage of business. If you are a new start you may decide to make a loss so you can maximize growth and market share. The more mature the market is, the more important it is to return a profit as a reward for early losses. You can track gross and/or net profit margin.
You’ll need to make some accounting adjustments to your bookkeeping to have accurate figure which is why we recommend preparing management accounts.
Net Promoter Score
One of the most well know ways to track customer satisfaction is called the Net Promoter Score (NPS). It is very simple – just starts by asking customer “On a scale of zero to ten, how likely are you to recommend us to someone else?” You then apply a formula to calculate your NPS score.
According to research from leading management consultancy Bain and Co, the higher your NPS score the higher your growth will be compared to other companies in your sector.
Scores can be collected with scorecards or email surveys.
Just like the NPS – businesses with high employee engagement experience higher growth rates, and higher staff productivity.
There are systems you can use to help you such as https://www.officevibe.com/.