We know, you opened this article thinking it would be a step by step guide, with excel worksheets included. You anticipated it would lead you down the path of how to transfer the numbers from your Financial Statements and turn it into a new and exciting way to analyze your business financial performance, normally considered it’s Profit.
Sorry if you are disappointed, but the purpose of this article is to encourage you to expand your measurements of success in your business solely based on the bottom line. While we agree it is incredibly important to keep a knowing eye on your growth and profitability, we want to help you consider other ways that help you gauge your business path to success. And you will notice we do list Profits as the first method of measurement.
PROFIT - It is beyond critical that your business provide a profit if you intend for it to support you and your employees. The simple way to think of it is if there is money left over after paying all expenses and payments associated with the business operations. We have written other articles on Profitability, so for more detailed information search our site for profit or profits or profitability.
CUSTOMERS - A key factor in determining the successful future of your business is through an understanding of your customers. Ask yourself these questions: Are you gaining new customers? Are you retaining your existing customers? Do you know the reasons you are losing those customers that are no longer utilizing your products or services? Within the answers to these questions you will find another key indicator of the profitability of your business.
EMPLOYEE SATISFACTION - This is one area that we spend a great deal of time and focus on when we are coaching one of our clients because it is often the hidden source of a companies lack of growth and profits. As we suggested under the customer section above, ask yourself these questions about your employees: Are you retaining good employees? Are you providing a supportive, educational and motivational environment that encourages their professional and personal growth? Have you been able to re-align or if needed remove those employees that are impeding the progress of others? Having a quality process for interviewing, hiring, employing, training, and motivating employees is not easy and is extremely important to profitability.
YOUR SATISFACTION - In our opinion Owner Satisfaction is the most important measurement of the profits of a business. Profits are not just financial, they are much more than that. Very clearly, when the Business Owner is dissatisfied with their own business it will affect all aspects of the business, and especially it’s employees and customers. The wonderful thing about this is you have the ability to change your Satisfaction level, but you will need to spend some time examining your business and your own motivations to understand why you are no longer thrilled with your business, and then create a plan to make the changes that will translate into you gaining a renewed passion for the business you were once so very excited to start.