If there is one thing required of every modern business it is a dedication to growth. Knowing you need to grow your business is one thing. Doing it is quite another, and often we struggle to know whether we’re seeing true growth at all. The solution is to use growth markers to effectively monitor the success of your business, and ensure you are supporting genuine and sustainable growth, in the areas you care about most.
What Are Growth Markers?
It’s tricky to figure out how to successfully grow your business without first understanding the parameters of growth as they exist for you. In other words, in order to know which growth markers to use in your business, you need to know what growth means for your business.
For example, some people measure growth as a purely monetary thing: growth equals more money. This is the traditional model of growth measurement, relying on increasing sales (turnover), improving financial efficiency (profit), or both.
On the other hand, some businesses measure growth based on their reach – the number of followers they have online, or sign-ups on their email list.
You likely already track your growth in terms of money, either by doing your annual accounts, or having monthly income goals as part of your business plan.
But success means different things to different people and different business models.
If you run a charity or a non-profit, your focus will be less on growing your income and more on increasing the positive impact you have on the world.
Growth, for you, would be measured by the number of people helped, not the amount of money earned.
Growth Markers And Entrepreneurship
This can be true for other forms of business too, such as health and wellness professionals, and coaches, who place a high premium on the wellbeing and success of their clients. That can be a more valuable reward than money, and consequently is a better measurement of growth.
A lot of entrepreneurs measure their growth in terms of the personal benefits they reap as a result of their work. Increasing the amount of free time you can spend with your friends and family, without reducing your income, is often a more meaningful measurement of growth for the solopreneur than a number on a spreadsheet.
There is no one-size-fits-all answer to business growth, so growth markers can be pretty much anything.
As long as there are quantifiable means of assessing and measuring your success, and tracking that measurement in comparison to previous months, to establish if you’re doing better or worse, you have a growth marker.
That being said, there are some growth markers that are more commonly used, and more useful than others. They can be divided into three categories: financial, vanity (or social), and internal (or personal).
Here are ten different growth markers to measure the success of your business, and how to use them:
Financial Growth Markers
Money is the go-to metric when it comes to growth markers, so let’s cover the financial ones first. If you’re looking to get any kind of funding for your business, or you have shareholders, these are the ones they will care about.
Money is also the lifeblood of your business – whether you value it more than other markers or not, it’s what pays the bills and keeps everything running. So, even if you aren’t driven by financial goals, it’s still important to have a good idea of how you’re faring in this regard.
Your level of profit (income less expenses) is the easiest growth marker to understand and measure. Month-to-month, or year-on-year, seeing how much money your business is making is an excellent way to gauge how well you’re growing.
It’s also the metric most stakeholders and potential investors will ask about. Whether you’re looking for credit, a loan, selling shares, or reaching out to potential new partners, profits are the measure of success they’re most likely to want to know.
It’s also the metric used to value your business as a whole, as the value of most businesses is determined by a multiple of their annual profits. Having a proven record of steadily increasing profits, year after year, drastically increases the value of your business in the event you decide to sell, particularly if you can show the rate of growth is matched in your top line revenue.
The direct correlation between increased profits and success also keeps growth measurements very simple. The more profits you earn, the more successful your business is.
There are, however, a few things to bear in mind if you’re thinking of using profits as your only growth marker:
- Striving for maximum profits at the detriment of other areas of growth and investing in your business is not a recipe for success. If it’s your only goal, those profits will swiftly plummet if the market changes. More than that, your clients are unlikely to be happy, and you will fail to generate repeat business.
- When it comes to money your business relies on its cash flow more than its profit margin. You need a steady income to keep the bills paid and the business operating; large end-of-year profits don’t do you much good if everything falls apart mid-year due to lack of available cash.
- In the tech world particularly, businesses are increasingly valued by their ability to generate revenue more than their growth in terms of profits.
Speaking of revenue, the amount of income generated through sales is another simple method of measuring your business growth. This figure doesn’t take into account how much you spend (beyond cost of sales and associated costs like refunds), only how much income you generate.
As a result, it’s possible for your sales to massively increase or decrease while your profits remain the same, or go in the opposite direction.
While revenue can easily give you a simple measurement of growth, there’s a lot more information to be gleaned from it if you dig deeper.
It’s important to correlate your revenue data with other forces, like advertising campaigns, seasonal factors, changes in price, etc. Really drill down. Don’t settle for a basic sales metric, use Return on Assets, Return on Sales, or another more sophisticated version like Asset Turnover Ratio.
#3 Client Acquisition Costs
Your Client Acquisition Cost (CACs) is similar to your Cost Per Lead (CPL), but it only applies to leads that become paying clients. Measure how much it has cost you, in total, to acquire every new customer, including all sales and marketing efforts, and cost of sales. This will give you a good idea of the level of growth your business is experiencing, and complements other financial growth markers (in particular profit and revenue) very well.
If your profits are going up, but the number of clients you’re landing is going down, your CACs are rising with your profits. Growth, with this marker, is measured by a decrease in costs, not an increase, so it’s very useful to look at both side-by-side.[Tweet “You want profits to be up, and client acquisition costs to be down!”]
It’s simple to calculate your CACs, just divide all your acquisition expenses for a given period by the total number of new clients gained during the same time frame.
This will give you a clear view of whether your advertising and marketing efforts are performing well enough, or need to be improved. As your business grows and your brand image and reputation improves, CACs should naturally decrease.
Vanity Growth Marketer
Vanity growth markers, or social growth markers, are the indications of business growth that are visible and/or important to the public. They’re the things you happily shout about when they improve, and proudly display as a way of boosting your profile or reputation.
#4 Client Retention
When you have poor retention, you may take on new clients, but you’re losing existing ones, so there is little or no overall growth. In fact, you can actually see a downturn.
Loyal clients will come back to you again and again, happily invest in higher priced and higher quality items, and actively generate more business for you. Word of mouth is a powerful thing. When your clients are happy and loyal, you will retain them. This in itself will help your business grow, as any new clients you take on will represent an increase in your client base.
The level of client retention in your business is easily measured using a few simple data points:
- How many of your clients on retainers renew their contracts?
- How many clients make multiple purchases, at different times?
- How many of your new clients tell you that you were recommended by a friend?
You can measure this using sales and purchase analysis, as well as by asking for direct feedback from clients, and running client surveys. Again, this is a metric that relates directly to other growth markers, particularly profit. According to experts like Fred Reichheld, seeing just 5% improvement where client retention is concerned will boost your profits from 20% to as much as 100%.
#5 Email Subscribers
While this isn’t always a metric that is visible to the public, it ties directly to client retention and is still very much a social concern. The number of people on your email list can have a huge impact on your marketing.
It’s not true that bigger is always better.
A few quality subscribers who are your ideal clients always beats a long list of random, uninterested parties! And yet, generally speaking, a larger email list of quality subscribers will yield better marketing results.
More than this, being able to tell people you have a good number of subscribers increases buyer confidence, while making you a more attractive investment, and more appealing to potential partners for collaborative projects.
#6 Social Media Followers
One of the bizarre truths about social media is that the number of followers you have doesn’t generally dictate how helpful your platform is to your overall marketing efforts. In fact, having more followers can actually decrease your engagement on certain platforms, like Facebook, making it more beneficial in some regards to stay small.
But a large social media following is an undeniable and very public indication of growth.
Just as a larger email list will improve buyer confidence and help you win investment opportunities and collaborations, a large social media following can aid you in everything from landing a client, to snagging a high-profile interview, or even scoring a book deal.
Just make sure all those followers are your ideal clients!
#7 Social Media Engagement
Linked to this is your level of engagement on social media. This is also public, as most sites display something akin to Facebook’s ‘talking about this’ stat, and anyone can see how many likes, shares, retweets, comments, hearts and other engagements your posts carry.
As I mentioned in my post on boosting your engagement and organic reach on Facebook, people have something of a sheep mentality.
When they see other people engaging with your content they believe it’s worth engaging with, and join the conversation themselves. As such, your engagement is much more valuable, from your perspective, than the number of followers you have. On a conscious level, however, the public perception of your brand will be affected equally by both.
Internal Growth Markers
The final form of growth marker is one that is frequently overlooked, and usually more difficult to quantify. Internal growth metrics are areas of your business’s infrastructure and internal workings. They’re not usually visible to the public, and unlike financial and social factors aren’t often taken into account by anyone but you.
That said, from your point of view they are as essential as the others, and balance out the perspectives given by financial and social concerns.
This one is really tricky to quantify, but one of the best ways to measure your business growth is by monitoring your innovation.
Are you continuing to perfect your systems and strategies? Are you getting better at the things you do? Have you stagnated?
Remember this:[Tweet “If you always do what you’ve always done, you’ll always get what you always got.”]
If you want more from your business you need to find better ways of working. It’s vital that you continue enriching your expertise, your brand, your profile, and pushing yourself to learn more.
#9 Your Team
Another great way to measure your growth internally is to look at your team.
As an entrepreneur, the moment you step up from doing everything yourself to outsourcing certain things is a massive indication of growth. Hiring part- or full-time staff is another way your team can demonstrate your business is thriving. But beyond this there are several things going on with the people working with you, and for you, that can indicate growth:
- Are your staff/freelancers content or restless?
- Do you have a high turnover of staff/freelancers?
- How productive is your team?
#10 Time Spent
How many hours do you spend completing tasks?
The length of time it takes you or a team member to complete tasks can be a great growth marker.
For example, streamlining your workflows and processes so they achieve the same standard, while taking less time, is a good indication of growth.
It will also have a knock-on effect on your financial growth markers in terms of increasing your profits and decreasing your expenses.
Automating as much as possible is a massive boost to productivity and the amount of time spent on various things. If you’re a one-(wo)man-operation you might choose to measure your growth by how much you have automated, rather than the extent of your team.
Take a look at your ROI – automated systems, outsourcing, and hiring team members are all areas that will give you a level of return on your investment. The higher your ROI the better, so this can be a great growth marker to use (although it’s arguably financial as well as internal).
No matter which growth markers you choose to use, data is the key.
The more data you have to monitor growth, the more complete and accurate your view of the progress you are making in your business will be.
Are you looking to grow your business? Book a FREE discovery call now and we’ll figure out exactly where you are, where you want to be, and how to get you there!