Keeping Track Of Your Business Growth
Serial entrepreneur Creel Price says, “In business you are either green and growing or you’re ripe and rotting.” In the digital age if your business isn’t going forward, it’s actually going backwards. So how do you measure your business progress?
Firstly, you need to measure and monitor your financial and marketing key performance indicators (KPIs). Typically, you can start by comparing some key numbers in your business. Here are several methodologies to consider.
This Month Vs. Last Month
This is a very simple starting point. The objective is to maintain constant improvement in your website traffic, online leads, and sales conversions. Having a goal of continuous improvement in your KPIs will have a compounding effect on your business growth.
Most importantly, an upward trend in your online traffic is a sign of a healthy business. If your marketing is working it should flow through to your top line revenue. Thanks to programs such as Google Analytics, comparing your month to month statistics on website traffic is very easy. Once set up, you can then measure online leads while your sales data is readily available through your accounting software.
You might also schedule a mid-month review of the indicators and make changes if you aren’t on budget to beat last month’s figures.
This Month Vs. Rolling Three Months
One of the challenges when comparing month to month figures is you may encounter a ‘blow out’ month, which may prove difficult to top next month. Your activity might peak in a particular month leading up to Christmas, Easter or EOFY. To get a better picture of your performance you might look at the figures over a rolling three month period to balance out the months of abnormality. By using a rolling average you smooth out the irregularities and have the ability to observe the positive trend line.
This Month Vs. The Same Month Last Year
Nearly every business has seasonal trends. For instance, retail sales crank up around Christmas then fall away in January. Some cater for summer activities (surf and golf shops) while others peak in winter (ski shops and AFL Stores). For these seasonal businesses, comparing this month’s data to last month’s data or even a three month rolling average can be misleading. Instead, compare this month to the same month last year..
Trend data is very important in marketing and sales. Ideally, you want to see positive trends over a longer period of time. Sometimes, month-on-month data or even three months of data isn’t a big enough statistical sample. Analysing longer periods may give you a ‘bigger picture’ of how far your business has come. Reviewing 13 months of rolling data lets you compare figures for the same month last year, last month and the trend for the previous 12 months.
Set Your Budget
All of these comparisons are useful, and may prove that your business is green and growing, but could you be growing faster?
Think about setting growth goals with your website traffic, online leads and sales conversions. Your budget will certainly be tied to historical performance, so your goals need to be realistic. If you have set aggressive sales goals then you will need to review your website to make sure you have a plan to drive more traffic. Don’t forget to track the conversion metrics as well because you don’t have to increase visitors dramatically if you’re increasing the sales conversion rate.
Don’t budget on increasing your website traffic by 50% this month compared to last month if you’ve averaged 10% growth historically. You may need an aggressive blogging schedule, daily off-site SEO tactics, solid social media plans, email campaigns, a highly responsive website and a very active content publication plan. These need to be in place for at least three or four months prior to the month you’re targeting for the 50% increase in visitors.
You can see that this level of results requires solid planning and a well-thought-out, tightly integrated inbound marketing strategy. These types of results don’t just fall into your lap. Make sure that your expectations are realistic and are backed up with the necessary plans.
Click HERE to download the full edition of The Business Accelerator Magazine for June 2015.
Other articles in this edition:
- 2015 Individual Tax Return Checklist
- 2015 Companies, Partnerships, Trusts & Other Business Tax Checklist
- 2015/16 Budget Overview
- Small Business Measures 2015
- Personal Taxation 2015
- Other Budget Measures 2015
- FBT Changes 2015
- Tech Corner... Video Chat Tools
- ATO Issues Scam Warning
- ATO Data Matching Targets