Entrepreneurs today are proficient at launching a start-up, with innovative ideas and charmed investors. With the thrill of launching a business, however, founders often fail to analyse key metrics that give insight into business growth. This ignorance is often the cause for failed start-ups.
While there is no cheat code to a successful start-up, there are a couple of important metrics that hold good for any industry. Three of them that every growing business absolutely must look out for are:
Tracking every penny to enter and leave your company coffers is vital to sustaining a business. Money comes in through investor funding and sales revenue, while cash flows out through company expenditure. Remember, incoming cash is not profit. This confusion often damages companies irreparably.
Run periodic cash flow reports to analyse how much revenue is being made against the amount being expended. These reports are baselines for sales teams who should push to achieve realistic targets. The money left after negating expenditure from cash inflow is the company’s net profit.
Although not a tangible metric, employee satisfaction is vital to a growing company. They are, after all, the ones who run the show. Start-ups often hire lean in order to cut back on expenditure. This results in overworked employees, which can be cancerous for any company.
Annual surveys and feedbacks are simple methods to gather employee feeling towards the management and the company as a whole. Monthly managerial meets is another great way to boost employee morale. Both these options cost little to nothing and are easy to implement.
Startup founders sometimes pay all attention towards clients and fail to notice problems arising within. Remember, a happy worker is a productive worker, which will ultimately lead to a happy customer.
It’s better to have one happy client, than ten frustrated ones. Retaining existing customers is more important than roping in new ones, although the opposite often seems more lucrative. More customers equals more income, right? Maybe, but ignoring existing customers can lead to negative reviews which will finally lead to no customers.
It can be thrilling for a new start-up to chase as many potential clients as possible, in an attempt to build a large clientele. A small company with a large customer base will always find it challenging to divide time and effort equally, leading to imperfect service and dissatisfied customers. Stick to giving hundred percent effort towards existing customers, before looking out for new ones.