Based on a recent article by Newtek in the “Small Business Observer” there are 3 ways to measure your small business performance. In business, we’re mostly trained to measure the success and vitality of our company using a small set of standards. Largely, this has to do with looking at profit and loss. In principle, this seems like a pretty solid way to measure how healthy your company is; making money is the point, right? It’s so easy to get pulled in a thousand directions by all the day-to-day things happening with your small business that it makes sense to take a step back and look at the hard numbers to determine if you’re truly on the right path.
To an extent, this is true. Keeping an eye on your P&L is never a bad idea. But using it as the sole measure of performance is not only limiting, it could be completely inaccurate. Here is a list of other factors to examine to give you a more accurate and well-rounded picture of how your small business is truly performing:
1. Number of proposals on the table
Maybe potential new clients haven’t officially come into the fold yet, but if your company is engaged in the proposal process with a handful of genuinely promising prospects, that can be a huge indicator of growth that you won’t see by looking at any profit and loss worksheet. This is the kind of factor weighed heavily by the savvy small business owner who knows that a company’s health is more about where they’re going than it is about how they fared in the past.
2. Investments that haven’t returned yet
Perhaps your company just hired three absolutely stellar new employees that promise not to just strengthen your current efforts, but to help your business expand and grow. Or maybe you just moved into a new office that is going to infinitely increase your ability to meet with and serve clients effectively. Or you just bought a new piece of machinery that is going to streamline and/or increase production. The point is, there are a lot of low-risk ways you could be investing in your small business that are almost guaranteed to show huge returns, but you’re just not to that point yet. When looking at the books, don’t let an investment turn into a financial hit just because it hasn’t had time to mature and prove fruitful yet.
3. Number of strategic relationships
Growing your business isn’t just a matter of increasing sales and number of clients. Well, obviously that’s the bottom line, but going directly for them isn’t the only avenue towards attracting new business. Building new relationships with other people in your industry, or people in adjacent industries with whom you could forge strategic partnerships, is an essential part of establishing you and your company as a brand of thought leadership. There’s a difference between being a company who knows how to go after and lock down new clients, and being the company who people are vying to work with. And that difference has everything to do with how you manage your professional relationships and extend your brand in the personal, real world. So when measuring the current performance status of your small business, be sure to take into account any potentially advantageous new relationships or possible future partnerships you’ve been working on. Raising your company’s industry profile now means raising the bottom line later.