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What are Small Business Metrics?
When driving a new car, it is difficult to see what all the knobs and switches mean. Likewise, it isn’t easy to understand what the dashboard is telling us at your first glance. Some of the information is obvious, such as the fuel gauge, speedometer and mileage. But there are many other things that we don’t use but should we, and how important are they to our journey’s progress and safety.
When you start as a business owner, the last thing you want to think about is tracking metrics like customer satisfaction to see how you’re doing. However, it’s essential to measure your company’s success, and there are several ways you can do that. The basic idea is that when you identify key metrics that matter, you can create a sense of urgency around getting those numbers right. So it is essential that you set up a dashboard to effectively and efficiently measure your key business metrics. But the first question you may be asking is, what is a key performance indicator (KPI)? Which ones should be included in the dashboard? This article will give you an overview of the basic metrics you need to monitor your online business.
What is a key performance Indicator?
A key Performance Indicator (KPI) is a metric that measures an organisation’s success in achieving its goals. KPIs can be used for internal purposes, such as measuring the effectiveness of marketing campaigns, or external purposes, such as comparing the performance of different companies. It can simply be a measurement of how well your company is doing against its goals. It is a way to measure and improve your business performance. An example would be measuring the effectiveness of your marketing efforts over a given period and how well you converted those potential customers into actual buyers and identifying the customer acquisition cost of the process against your business plan.
You need to decide on the KPIs to meet your business goals. But, of course, you need to decide on the goals that are important to your business and they meet the criteria below,
- They are tangible in that you can show improvements, such as increasing web traffic or subscribers to your email list, to improve the profitability of your business.
- You can measure the KPI: You should have the means to measure the movement of the KPI. For example, if you measure web traffic, you can use google analytics to track the web traffic.
- They are over a time period: Using historical data as a reference over one month to increase web traffic from X (which is the previous one-month data) to X+30%
- The impact on Profitability: The goal associated with this KPI should be to enhance the probability of your business.
A business plan is a document that includes defining who will run the business, where it will operate, what products/services it will offer.
How much money it needs to make each year, outlining the strategy behind starting and running a business, including your marketing strategy, sales strategy, and any email marketing campaigns.
Business plans also include financial metrics, including projections that predict future revenue and expenses based on past trends. They provide a road map for reaching specific milestones along the path towards building a successful business.
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Cash flow forecast
An integral part of any business plan is the predictive cash flow statement. The cash flow can be measured in real-time once you start trading and is helpful in forecasting and enabling the business owner to assess their current financial position.
Sales performance is crucial to the success of any business and is, therefore, one of the most important KPI’s for small companies to track, especially if they are looking at their cash position.
To make your cash forecast, add the total amount of cash your business has in the bank to the projected cash value of the next four weeks, and then subtract the projected cash you will need over the next four weeks. You can use this method to see how well your business is doing financially.
What is website traffic?
Website traffic is the number of people who visit your website in a given period. This can be measured using different methods, including counting the number of page views on your site and the number of unique and returning visitors to your site or the number of clicks on links that take you to your site.
In addition, there are other ways to determine the level of interest in your product or service by analysing search engine results pages. These tools allow marketers to find out more information about the keywords related to their websites. Keywords are often found within titles, descriptions, URLs, meta tags, headers, and body text. Search engines like Google display these words in order of relevancy so that users may readily locate them. In addition, there are many keyword research tools available online such as Ubersuggest, which offers a free trial to suggest keywords for your content.
You can measure website traffic by subscribing to a free account from Google Analytics. If you have a WordPress site, you can install a Site Kit plugin that will give you detailed information regarding visitor numbers, traffic sources, pay per click and organic traffic devices used, and the users’ location. Facebook and Google both have metric dashboards to measure the effectiveness of your advertising campaigns. These are invaluable to any small business where the advertising budget is limited and needs to increase the percentage of customers purchasing from your website. When you reach the point where you want to integrate the digital data from Facebook, Twitter, Google and Shopify Oviond will bring your marketing data together in one simple platform.
Measure Your Website Traffic
You can measure the number of visitors to your website over a fixed period; I suggest measuring this each week and comparing it against an earlier period. Your success in building traffic to your website can be measured by the increase in your traffic, including any SEO work you have done and the impact of paid advertisements on social media sites such a Facebook or Google.
Measuring bounce rates show the number of visitors who leave after viewing one page only — these should be as low as possible. It would be realistic to be aiming for a bounce rate of between 40% to 60%. The traffic source affects the bounce rate visitors from a Google search tend to stay on your site longer than social media.
To measure website traffic, you have to find out what traffic sources they come from. Paid ads, organic search, social media platforms and other sources are included. Next, you can measure the effectiveness of your sales funnel by looking at the click-through rate and the funnel drop-off rate and then counting the cost of customer acquisition. This enables you to calculate your actual profit margin against the one in your business plan.
A Typical Sales Process Funnel Which Is Measuring the Customer Journey.
The conversion rate is essential whether you have an e-commerce site or collecting email addresses. Therefore, identifying the number of visitors making a purchase or signing up reveals how effective the landing page is in creating a positive customer experience and persuading potential customers to buy/sign-up for your offers. Following the initial purchase or sign-up, your actions must achieve customer satisfaction with their “purchase” and become loyal customers to your brand.
In summary, we can see that we have explored a brief overview of the primary metrics used to measure the success of a small business. These metrics will help you understand how to measure your small business progress and enable you to make better decisions about the direction and focus of your small business. There is a range of other metrics, mainly financial, which you can introduce later to measure your business’s successful growth and profitability. Other metrics will become relevant as your business expands. For example, you will need to consider using metrics around customer satisfaction. When you start to recruit employees to your business, you will look at other key performances relating to employee engagement and training needs. Always remember that metrics are a source of information you need to make the decision and action required.