How to Accurately Measure Business Success

In a few months, business owners across the globe will conduct annual reviews and close out the fiscal year 2019. For many, the end of the year is a time to take stock of company performance, identify strengths and weaknesses, and set goals for the future. One might assume that determining how successful a business has been is a relatively straightforward task. In reality, though, many factors can influence a business’s viability, and measuring its overall progress can be quite difficult. To that end, today we’re going to focus on how entrepreneurs can create accurate year-end reports that reflect the true nature of their business.    

The Bottom Line

Obvious, yes, but your business’s bottom line is a great place to start a review. Companies that enjoy high profitability hold a clear advantage over businesses that just scrape by. However, it’s important to keep certain contextual factors in mind when reviewing final income/expense reports. For instance, expanding a business is a costly endeavor that will eat away at surplus funds. So a company that added a second location in 2019 might generate less profit as a result this year than last, but that second location virtually guarantees more revenue in the following year(s). 

Retention Rate

One of the simplest ways to “take the temperature” of your business is to study its retention rates. Plain and simple, if employees aren’t being fired and they aren’t voluntarily leaving, then that indicates that you’re hiring effective workers. Unhappy team members don’t typically stick around, and companies with toxic cultures shed employees constantly. Businesses that are able to generate steady retention rates avoid the logistical dilemmas presented by the continual hiring and firing of employees as well. Lastly, comparing elearning providers and selecting a partner that can provide your team with a wealth of quality learning resources is a great way to maintain a positive learning culture

Relative Success

Some business years are awful. Economic factors outside of your company’s control may have an adverse effect your numbers. In such a situation, it’s best to compare your business with your closest competitors. Breaking even might sound like a bad year in a vacuum, but if a recession forced several of your competitors into bankruptcy, then treading water suddenly doesn’t seem so bad. 

Positive Impact

Measuring the impact your business has on the world at large isn’t easy. Yet, business owners should be concerned about how their organization affects its employees, partners, and customers. Ideally, businesses should operate in a sustainable fashion and offer useful, meaningful solutions to consumers. 

The Bottom Line

It’s possible for a business to have a dynamite financial return and yet, fail to meet other standards of business success. In the long run, though, if a company fails to meet one or more of the criteria listed above, it will almost certainly struggle.