3 Ways to Develop a Business Success Barometer
Studies show a direct correlation between goal-setting and success, and it’s easy enough to see why. Having goals gives you purpose and a sense of direction. Goals put you in the driver’s seat, allowing you to take control of your business and your future success.
But like all good things, goals that are too vague can be tricky to measure. This is unfortunate, because an objective that can’t be measured, or quantified in some way, is little more than wishful thinking -- no matter how noble it may be.
Just as important as goal-setting is developing a way to track your progress. Having barometer, so to speak, will show you how you are progressing -- and how close you are to reaching your goals. Seeing your progress will also help keep you stay focused and motivated, providing that rush of energy that you need to keep at it.
In short, having a business barometer will keep you on track for success. If you have big plans for the future and need a way to quantify them, a business barometer may be just what you need. Here’s why.
1. Metrics matter.
The best metrics are the ones that allow you to see whether you’re moving towards your goals. For best results, metrics need to be implemented throughout all levels of an organization. But even for single-person enterprises, or for those who are just starting out, having a way to measure progress toward a goal isn’t just a good idea -- it’s central.
“Performance metrics are a way to keep your strategic planning activities honest,” says Justin LaChance, senior vice president of financial planning and analysis at GE Capital. It’s important to identify both short-term and long-term operational goals so that you can create metrics that align with them.
2. Define success.
What does success look like? Success is different for everyone. For me it’s about being able to influence causes that I care about and taking on a mentorship role for young and hopeful entrepreneurs.
For you, success may be a financial number -- a specific amount each year. That’s fine, but don’t forget about other factors that could also spell success. What about growth, scaling your company? Or publicity, dominating your industry? Take some time to develop a three-year or a five-year plan, listing a set of goals that you hope to accomplish during that time. Each of your milestones will factor in to create your own definition of success.
3. Create your barometer.
Once you have your goals written down, you’ll want to develop a way to measure your progress. Whenever possible, try to quantify the results you’re after with a specific measurement -- time, money, or a percentage. Here are some examples of metrics that could be used for different goals.
If your goal is to dominate your industry, measure your progress by calculating your market share.
If your goal is happy customers, track customer referrals, online reviews, feedback and repeat customers.
If building brand awareness is important to you, media mentions, speaking opportunities or social media followers are all great indicators that you’re on track for success.
If you have a specific dollar amount in mind, your barometer will be financial reports: revenues, sales quotas, cash flow and burn rate. See a list of financial metrics you should be tracking.
Metrics are most telling when looked at collectively. Identify key metrics, and then look at them together to get the big picture. For example, you may decide that you want reach a specific financial benchmark in three years. In this case, you’ll want to look at revenues, sales quotas, profit and expenses collectively to get a more telling story.
Institute weekly, monthly and yearly reporting systems that you can hold yourself accountable to. Analyse the metrics, and see how well different aspects of your business are performing in relation to your goals. Over time, you’ll be able to see trends -- which will show you which areas may need improvement.
Keep in mind that your definition of success will most likely change as your business continues to grow. Don’t be afraid to pivot from your original version of success, to set new goals, develop new plans -- and then readjust your business barometer accordingly.
Remember, the old adage is true: “You can't manage what you don't measure.” Having goals and a system for measuring your progress is important. It’s the best way that I know to make things happen, and the only way to ensure that you’ll end up where you want to be.
How do you quantify and measure your goals?
Brenton Hayden is the founder and chairman of the board of Renters Warehouse. A Harvard Business School and MIT Sloan School of Business graduate, Hayden leads a team of over 140 employees and franchises in 21 states with a portfolio of managed properties valued at just under $1 billion.