Small-business owners may use a variety of measures to gauge success. For some owners, success is determined in large part by tangible measurements such as revenues and profits. For others, success is defined in intangible ways. Taking the time to create your own definition of success can help ensure that your business venture remains on the right track.
Learning from Customers
According to Entrepreneur Magazine, one measure of success, particularly in the early stages of your business, is how much you learn from your customer base. By discovering why customers choose you and obtaining feedback about your products and services, you will learn what is working and what needs improvement. By continuing the learning process as your business grows, you will be able to meet the changing needs of your customers, increasing your chances of long-term business survival.
You probably started your business with certain expectations in mind. For instance, you might have thought that working for yourself would be much better than working for a company, or that making your living while doing something you love would improve the quality of your life. If business ownership has fulfilled most or all of your expectations, you're likely to feel that the experience has been successful.
In addition to meeting long-term expectations, you can gauge your success by the number of uplifting events that occur during the day-to-day operation of your business. For example, a positive conversation with a potential customer or effectively resolving a customer dispute can give you a good feeling. Having a customer tell you that a service provided by your business has had a positive impact on her life can make you feel that your business offers value to your community. The small successes can be a sign that your business is heading in the desired direction.
A more tangible measurement of business success is its overall profitability. If you're seeing a steady increase in revenues in relation to expenses, it's likely a sign you're headed in the right direction. On the other hand, a prolonged period of being in the red or a pattern of decreasing profits can signify serious trouble.
An important component to long-term business success is developing an effective marketing strategy to keep customers coming through the door. While spending big dollars on a marketing campaign may increase your customer flow, you'll need to determine whether the expense was justified. Calculate the cost of acquiring a new customer by dividing your total marketing costs for a given time period by the number of new customers you've gained. For instance, if you spent $500 on marketing in a quarter and acquired 25 new customers, the cost per each is $20. The lower the cost, the greater the effectiveness of your strategy.
About the Author
Chris Joseph writes for websites and online publications, covering business and technology. He holds a Bachelor of Science in marketing from York College of Pennsylvania.
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