Gauging the Success of Your Business
How do you know if your business is successful? You've probably heard the saying, "You get what you measure"--so how do you decide which metrics are the really important ones to watch? ROI? Sales? EBITDA? Stock price? Cash flow? Each of these benchmarks is important for different reasons, and depending on what question you're trying to answer, any of them could be a relevant response.
When I started my company more than three years ago, my main concerns were about filling the pipeline with interesting client work. Would there be enough work to keep my colleagues busy and interested? In year two, we tripled our revenue and the business was growing steadily. In year three, we tripled again and the concept was scaling successfully. Then I started to panic--could we maintain the quality and culture that we were known for if we tripled again this year (year four)? Would it still be a business I want to run?
I started this business with the goal of working with people I respect and admire for people I want to help succeed. I wanted more autonomy, flexibility and control. The funny thing is, I'm working longer and harder than ever before, but it feels different when it's your firm that you're building. So in year four, I'm starting to think more about what I want this company to be known for in the market. I didn't start this business with a specific revenue target in mind, but I know growth is critical both personally and professionally. I've realized that the metrics that matter to me most are not the typical entrepreneurial concerns:
Downtime for extra-curricular activities. I wanted to start a business I could leave when I went on vacation and not worry about or let consume me so that I could relax and enjoy myself. (When I'm on, I work all the time, but when I take off, I really want to wind down.) I wanted to have time for community involvement and advisory board work, which I never seemed to be able to squeeze in as an employee.
Work-life balance is not a concept I understand well. I knew my business was real when I took a vacation the first summer after starting it and new business still closed while I was away. They were projects I'd been trying to convert, but the checks didn't actually arrive until I was out of town. In fact, every time I've taken a vacation, a new client has signed up. I take that as a positive sign that the organization can survive and thrive without my intervention at every step.
Recharging your batteries is critical, and I know I'm more effective and creative as an entrepreneur when I get out in the real world, away from my office and my computer. Making time for family and friends keeps me in touch with reality and helps me make better decisions. I've been able to find time to coach a group of inner city entrepreneurs, and it's been incredibly fulfilling to share my experience and lessons with them. It's inspiring to watch them grow their businesses and learn from the group.
Staying true to my core beliefs. Loyalty is one of my core values--loyalty to self and to others whom I respect. It's important to me to gauge how many colleagues and customers come back and refer us to those who trust them. Being true to the mission of the organization and delivering superior experiences matter to me a lot. Having the confidence to walk away from a client or colleague who's diluting the equity in your brand is tough, but it's necessary sometimes. You must always be authentic to the essence of your brand and surround yourself with people who reinforce your brand and its values--not tarnish it.
So I've come to the conclusion that for me, relationships matter. Quality encounters matter. Honesty matters. Consistency matters. Authenticity and integrity matter. The experience and the journey matter. Focus on what matters to you and get rid of things that don't. Taking the clutter out of your mind and your life frees up space for more of what you value.
Success is very personal so your definition will be--and should be--different than mine. To me, growth for growth's sake is meaningless, but profitable growth with interesting clients solving important problems is what keeps me engaged and excited. The ability to spend time with people I love and care about is critical. My reputation really matters, and the positive word-of-mouth means a lot to me since almost all of our business comes by referral.
So how can you measure these things like quality and experience? I used to conduct customer satisfaction surveys when I worked for large companies, so I know research is important, but are there more tangible ways to see if your clients are benefiting from your work? I've been asked by a client to join his company's board of directors. Another client introduces me at meetings as his business consigliere ("She may tell you she's a marketing consultant, but I don't make an important business decision without talking to her first!").
When we become part of the fabric of the business, the culture, the DNA--and they can't imagine us not being part of their team--I know we're doing well. When price isn't part of the discussion and we're their partner of choice, I know we're on the right track. When I focus on the things that really matter to me, good things just happen.
Don't forget, however, that the financials can't be ignored--you have to have positive cash flow to survive. Getting a strong return on your investment is great. But as one of my professors used to say, happiness is positive cash flow, too. At least in my experience, when you measure what matters most to you, you'll attract the right kind of colleagues and clients and your business will succeed as a result.
A great quote about success comes from Ralph Waldo Emerson:
"To laugh often and much; to win the respect of intelligent people and affection of children; to earn the appreciation of honest critics and endure the betrayal of false friends; to appreciate beauty, to find the best in others, to leave the world a little bit better, whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded."