Business Mentor: How to use various business metrics

Armando Bartolome

Posted at Jun 01 2019 09:33 AM | Updated as of Jun 01 2019 09:36 AM

The rise in the company’s revenue is not the only thing that an entrepreneur should be looking into. There are business metrics that entrepreneurs need to focus on to keep the business on the right track.

You need to ensure that you stay on top.

Business metrics track, monitor, and assess the success or failure of business processes. It tracks cost management and shows a company’s progress over a certain period. Business stakeholders need to identify and discuss which among the metrics matter to them.

1. Sales Revenue. This is what most entrepreneurs are concerned about. An entrepreneur wants to see earnings from the business he started. However, sales revenue is affected by various factors such as price changes, advertising campaigns, and seasonal changes. One classic example is how businesses boom during the Christmas season.

2. Employee productivity. Employees should be assessed at least every month to determine who really works hard and helps ensure that the company is able to produce the kind of quality that is expected from them. I do think that it is important to keep the people that are truly dedicated to their work. Similarly, you can reward all deserving employees to boost their morale.

3. Customer loyalty and retention. If your employees do not treat your customers right, they are unlikely to come back even if you have competitively priced products or services. Instead, what you gain is negative publicity that could affect your business. Remember that it costs a lot of money to clean your name. It would be helpful to hear from your customers and know about their experience with your business. This will be a useful guide on how you can improve your products and services.

4. Business Process and Documentation. The role of each employee may evolve over time. Simply providing them with new instructions may not be enough. It is important that everything is properly documented so that when the time comes and there are employees who may blackmail you, you have documents to show how things have been done.

5. Employee Satisfaction. Entrepreneurs should know if the people working for them are still happy with what they do. An individual who doesn’t feel that his efforts are recognized or he/she feels that there seems to be no room for growth in the company may feel unmotivated and unproductive. Therefore, having time to talk to your employees and asking them how they are and if they still feel happy with their jobs is very important, as well.

6. Virtual Presence. The company website along its social media sites is an effective tool in connecting with prospective clients, clients, prospective customers, customers, suppliers, etc. Their content should be updated regularly and there should be dedicated staff to reply to their queries.

7. IT Infrastructure. Almost all businesses today, regardless of how small they can be are all tied to the digital infrastructure – from sales, logistics, marketing, management, and human resources. Companies should ensure that their digital infrastructure spending is not more than the revenue that they earn.

8. Net Profit Margin. You must calculate the monthly revenue less the costs. To increase your revenue, you may increase your price for the products that you offer, and by selling more. To sell more means having to do some work like improved ad campaigns. Some companies also reduce the cost of their products without compromising quality. This would require thorough market research and an effective business strategy.

9. Website Traffic. A company’s website is not published online just to make a colorful display of a company. It tells what the company is all about and what it offers. When the website provides the information that customers need, people check it more often to see the latest products being offered. Therefore, a website needs to be updated on a regular basis to promote customer loyalty.

What key business metrics does your company keep track? Make it a habit to check your business metrics frequently to ensure that you don’t waste your time and resources. Although you have people to help you with your business, you still need to be aware of how your company is doing, not only based on the revenues.


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