The Three Most Important Measures of Business Success:

As a business owner have you ever wondered how to "measure" your success? This is a common yet very important question to all of us running our businesses.

I am a firm believer that you can only manage what you measure. Is your business measuring the right things? How do you know?

As usual, I have a perspective to share with you. To me, the three most important measures of success of your business have very little to do with simply knowing how much cash you have in the bank or measuring the bottom line.

Here are three simple measures that will help you to gauge your business' success:

1. Are you increasing the number of customers of the type you want to have?
Did you know that according to my research, over 75% of entrepreneurs in the Okanagan have not taken the time to properly define the type of customer that they want to have? This is shocking.

However, let's give this more thought. I am not suggesting that just defining a potential customer base is enough. I am talking about knowing who you really want to do business with and who you don't. For example, who are your best customers and why? Why do they continue to deal with you? Do you know if you have all of their business or just a portion? How do you attract more customers like them? Have you ever "fired" a customer(s)? If not, why not? Again, my research shows that in the Okanagan entrepreneurs are spending way too much time on customers that are not meeting their ideal profile. As a result, the overall growth of the business suffers.

The key here is that you must define the type of customer you want to have and then set a strategy in place to grow that customer base. If you can't define this then you are not measuring one of the three most important measures of your business' success.

2. Are you increasing the number of times your ideal customers deal with you?
Loyalty isn't dead but your business may be if you are not giving your ideal customers a reason to do business with you more often. For instance, compared to last year, how have you been able to grow the number of times your ideal customers deal with you? Remember that a very small increase in this measure can have a huge impact on your profitability. Trying to please everyone will cause you to the sacrifice growing the number of times your ideal customers deal with you.

3. Are you adding value to every relationship?
How do you know if you are increasing this measure? Simply put, you measure it. I am talking here of every relationship that you interact with in your business, from your customers to your employees to your suppliers.

A rather simple yet tangible measure of "value" could simply be what is happening to the average transaction value of a sale in your business. If it isn't growing and you don't have a strategy to make it different, your business isn't maximizing its potential.

For instance, if a customer keeps coming back but never increases their use of the products and services and the scope of what they buy, you need to address the value that you are providing them. Have you ever asked a customer how you can help them more? You will be surprised at the answer.

What about your employees? Yes they have a job but have you provided them with opportunities to grow that they didn't have previously. Specifically defining how you will help them grow their scope of experiences and skill sets is also a strong measure of the value that you are adding to the relationship.

So, in summary, I encourage you to take my "Three Measures of Business Success", use them to evaluate your business and then establish a plan for growing each measure. You will find that the result is that not only will your business experience grow beyond your wildest dreams but you will have a lot more fun in your business.

Steve Burns, CA, CMC, CFP is the President and CEO of Burns Innovation Group Inc. and Steve Burns Inc. Chartered Accountant, which provide innovative consulting and accounting services to entrepreneurs. Steve can be reached at 763-4716 or via email at: steve@burnsinnovation.com or steve@steveburns.ca.

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