Emily Coltman from Freeagent gives her top tips for successful business measurement.
When you’re running your own small business it can sometimes be a challenge just staying on top of your everyday work, let alone managing all the things you need to do behind the scenes.
But if you can dedicate some time to measuring a few important pieces of admin in your business, you may find that you’re likely to work more effectively and give your business the best opportunity to grow.
How you’re spending your time
If you bill clients by an hourly or daily rate, you’re probably already tracking your time to ensure you charge for all of the work that you do. But monitoring your time is still a very useful habit to get into even if you don’t bill this way.
By identifying how much time you actually spend on working for clients compared to managing your daily business admin, you’ll be able to see how profitable your business really is and which clients are potentially costing you money. If you track admin time, and other unbillable time, you’ll also be able to see exactly how much time you’re spending on your business that you can’t charge for. It may well be more than you think!
And if your business offers a range of different types of services, you’ll also be able to identify which areas are most profitable, which may enable you to spot new business opportunities or even pivot your business completely.
Your business’s financial position
Calculating your profit margin is very important when you run a small business, because you’ll see which of your customers or projects are most profitable and can then use that information to try and grow your business. But there are other areas of your finances that are equally useful to monitor.
Make sure you stay on top of your business accounts and look regularly at the overall financial position of your business; ie, your cash flow, profitability, how much tax you owe and the amount of money you actually have in the bank. We found that just 38 per cent of micro-business owners check their financial position every week, while one in ten only check that information once a year. That means they don’t really know how their business is actually performing and run the risk of not being able to identify or deal with potential cash flow problems until it’s too late.
Expanding your customer base is an important way to grow your business, but it’s equally important to make sure your existing customers are happy. Research from customer service software company Zendesk shows that 95 per cent of people share bad customer experiences with others, while 39 per cent avoid vendors who they have a bad encounter with.
Therefore it’s important to understand how your customers feel about your business and whether they would recommend you to others. Carrying out a survey among your customer base and calculating your Net Promoter Score (NPS) is a great way to do this, but you may also want to look at other channels such as social media platforms to poll your followers and ask them for feedback about your business.
If you employ people in your business, you’ll want them to be as productive as possible, but you may also want to consider measuring how happy they are at work. Research suggests that high staff morale can increase productivity, so it’s a good idea to regularly survey your employees and measure their responses.
Are they happy in their jobs and with the business that they work for, or do they have any reservations? And are there areas that could be improved in order to make them feel happier? Armed with this knowledge, you’ll be able to address any potential problems as they arise and stop them from becoming bigger, morale-destroying ones in the future.
Social media impact
If you use Facebook or Twitter for your business, you probably try to measure the ultimate effect that these channels have on bringing new customers to you and, ultimately, improving your bottom line. But there are many other important metrics to consider when it comes to social media.
Look at how your individual posts are actually performing, and in particular how followers engage with those posts. Are there certain times of day when people click on the content you share? Are there specific types of post that generate more shares or likes than others? Do your followers tend to shun any advertising or self-promotional posts that you put out? A good social management tool like Hootsuite or Sprout Social can reveal that information, which will enable you to tailor your future social media activity and make sure it is performing as effectively as possible.
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