Despite the ongoing cost of living crisis and inflation pressures, over 800,000 British startups launched in 2022.
For business owners to flourish and keep pace with the entrepreneurial boom, it’s important they regularly measure progress to determine whether they’re on track to achieve their goals and tackle any foreseeable obstacles.
But when it comes to measuring progress, where do you start?
Establishing your goals and OKRs
Creating your business goals is a crucial first step in setting a clear path for success. However, setting goals without the ability to track progress, renders them almost useless.
To ensure you’re on target, it’s important to set Objectives and Key Results (OKRs). A framework developed by Andy Grove in the 1970s, OKRs are used by individuals, teams and organisations to define measurable goals and track their outcomes.
You must first decide what you want to achieve; this should be significant, definite, action-oriented and inspirational. There you have your objective.
Next, you need to set measurable and verifiable key results. These should be specific, time-bound and challenging, yet realistic. There is no space for dispute; you either meet the requirements of a key result or you don’t. You should then do a check, usually every quarter, to determine if your key results have been met or not.
When working towards a goal, the OKR tool enables you to establish alignment and adopt a collaborative approach with your team. Further, OKRs hold everyone accountable on an objective basis. They rely on statistical data rather than emotions or personal bias. When used effectively, they can also serve as a motivating tool by showing employees their performance is being closely monitored and valued.
Choosing the right metrics
When it comes to measuring your business’s performance, the metrics you choose will depend on the nature of your company. However, here are some fundamental measurements every SME should pay attention to:
- Net profit: This is the amount of money your business makes after deducting expenses. Changes in net profit reflect the overall health of your company. If it is low, it may indicate a variety of problems and allows you to examine where you may need to make cutbacks.
- Cashflow: This metric focuses on the movement of money in and out of your business. It’s crucial to understand how much money is coming in versus how much you’re spending. While higher spending isn’t necessarily bad, excessive spending may require a change in habits.
- Customer satisfaction score: This assesses how happy your customers are with your products and services. This can be quantified through surveys and will help you identify where you need to improve.
- Employee engagement: If you have employees, it’s important to gauge their level of engagement with your business, its values, and goals. Happy employees tend to perform better, creating a positive work environment that contributes to the overall success of your company. Again, this could be measured through regular surveys.
- Sales conversion rate: This measure reveals the number of prospects that become customers and evaluates leads coming through your marketing channels e.g., website and social media. Knowing when to change up your strategy to keep consumers engaged and generate additional sales comes from keeping an eye on your customer lifecycle.
The next vital step is to analyse and interpret your data. For example, if you detect a drop in sales, information from your customer satisfaction survey may enable you to make improvements.
Adoption of measurement tools
With the use of digital measurement tools, you can collect and analyse your data in real-time, with accurate and up-to-date information on your performance.
With online surveys and feedback platforms you can gather customer and employee feedback, analyse trends and identify areas of improvement.
By regularly reviewing your goals and OKRs, you can identify trends and take proactive steps to improve your business outcomes. By using technology as an aid, you can save time and resources, track your progress towards your goals and ultimately drive growth in competitive markets.