Success isn't always measured in the amount of commas and zeros. There are several ways to determine your success as an entrepreneur.
There’s no clear-cut path to measuring entrepreneurial success because everyone regards success differently. Some individuals measure success by pure dollars and cents, while others focus may be on customer satisfaction. There are some different schools of thought when it comes to assessing entrepreneurial success. Each with its unique way to track progress towards the pinnacle. This discussion will take a look at each different lens you can use to measure success and what metrics to use to track your progress towards achievement.
Perhaps the easiest way to measure entrepreneurial success is with money. How much has your wealth and the wealth of your business(es) grown? Money is a quick measure of success because it’s easy to track your financial growth through financial statements, balance sheets, and cash flow statements. In other words, money is a good measure because it’s easy to quantify, whereas measuring customer or employee satisfaction, for example, is a little more involved. The drawback to measuring success from a strictly financial standpoint is it can be only temporary. Your entrepreneurial endeavors can be profitable today, but bottom out tomorrow. The other challenge of measuring only by money is it is hard to detect the ceiling, or the point where you’re growth slows or even stops because you’ve reached the top of the mountain.
Money can also be a troublesome measure because when you aren’t earning a lot of money, or less than your competitors, it's all too easy to feel that your strategies aren't successful. In reality, it's possible that they just haven't paid off yet. Wealth isn't built overnight and, like any journey to that feeling of success, the path is wrought with ups and downs. When people measure their success by money, it becomes all too easy to feel unsuccessful, especially in periods where revenue is down, or you are spending more than you're making. This can lead an entrepreneur to make a quick decision based on current earnings, without realizing that the real potential to achieve financial success is just around the corner.
That said, money is an essential measure to one of the dimensions of success. No matter how happy you are with your efforts, if your cash flow runs dry and you can no longer operate, then success wasn’t achieved.
Another school of thought looks at success as a measure of how happy customers are. Even if the company isn't doing well financially, if customer satisfaction is high, then you can surmise that you have a good business and other dimensions of success, like the financial aspect, are within sight. It may be a matter of your business gaining more attention.
Measuring customer satisfaction can be a bit more laborious than just looking at the dollar amount. You have to actively survey customers about their thoughts and levels of happiness regarding your brands and products. Then, you need the responses recorded, so that you may measure the positive or negative nature of each sentiment. This feedback can be collected through social media platforms, review sites or survey questions issued via email or in person.
If you measure success based on customer satisfaction, it is essential to define exactly what a happy customer means to your business. Is it someone that's likely to return? Someone that merely liked your products? A customer that spends more than the average guest? Once you've created an idea of how your ideal happy customer feels and behave towards your brand, it becomes easier to ask the right survey questions to quantify these measures of customer satisfaction success.
You can also measure company growth based on how extensive the reach of your brands/products have grown, how many new customers you've acquired, how many new employees you've hired and other factors. Because so many different factors play into your company's growth, many people measure growth-based success by the overall health of the company. After all, growth can be bad, especially if you try and grow too quickly or beyond your means.
Measuring company growth (or health, depending on how you decide to look at it) is a great way to measure entrepreneurial success because you can introduce multiple different elements of growth into the equation. The drawback, however, is the more dimensions you add, the harder it is to boil your success down into a single, measurable metric.
You can also measure success by the happiness of your employees. The ideology behind employee satisfaction as a sense of achievement is that, if your workers are happy and progressing, then they'll continue to be thriving members of your business and thereby help you create future growth. Employee satisfaction is an often underlooked metric, even outside the realm of measuring success. Happy employees are more motivated to perform well, which results in better decision making and increased efforts to deliver superior customer service. Some studies report that happy employees are 12% more productive.
Similar to customer satisfaction, measuring employee fulfillment is a little more involved than some of the other strategies. You have to actively ask and monitor the levels of appeasement displayed by employees. Then, you have to see how these levels of employee satisfaction translate into productivity. This process can be time and resource consuming, which is why many companies only take the time to look at and measure employee satisfaction a couple of times a year.
One of the pitfalls of entrepreneurs measuring their success based on pure finances is that, in times of low earning, it doesn't necessarily mean your business is performing unsuccessfully. It could be a matter of small market performance. In other words, every company in the same space is underperforming because consumers just aren't spending what they used to in this space.
Measuring success based on market position requires you to keep a close watch on how your competitors are performing across all of the dimensions that you find relevant to success. If customer satisfaction is an essential factor to how you assess progress, then you have to look at the reviews and social media sentiments quantifying this metric for your competitors' businesses. Similarly, you have to look at any public earnings or sales reports that share insight into how your competitors are doing financially and how well their products are selling.
You can then compare this data to your own and determine how the health of your company compares. This will give you a clear view of where you stand amongst your competitors. While revenue may be down, it’s possible that you are still outperforming the competition. Once the market picks up, and you’ve put small business marketing strategies in place, you’ll see booming success again.
A lot of entrepreneurs look at success as this overarching sense of achievement. That's why so many use a measure of money or company growth to assess it because these metrics allow you to quantify that achievement. But, even little victories can mean success, which is why an alternate strategy is to measure success based on your ability to complete short-term goals. This measure understands that every small step is a win and a drop in the right bucket towards achieving success.
The compelling aspect of measuring success through the achievement of small goals is that you can have some different goals at one time that cover various aspects of entrepreneurship. In an example, you could have a goal to increase revenue by X% over the next three months, with another goal aiming to increase customer satisfaction by improving the number of positive sentiments or survey responses by X% in the same period.
The key to using the small goals to track small business success is creating objectives that are specific and measurable. Including an element of time is essential, as this will allow you to check your progress at any point and determine if you are exceeding your goals' expectations or underperforming.
There's no singular, right way to measure entrepreneurial success. The best entrepreneurs will likely look at any or all of the dimensions we've discussed above to get a complete view of their success, but they may focus on specific aspects more than others. The critical thing to remember about entrepreneurial success is it is ultimately your decision how you want to measure it. If the size and growth of your bank account give you the greatest feelings of happiness and success, then you may not need any other measure. Other entrepreneurs find joy solely in the experience of running their own company and supporting their employees.
It's also vital to remember that success will often come and go. There's no guarantee that the success you have now will carry into tomorrow. Alternatively, your business may be stagnant now, but that doesn't mean it always will be; success could be just another month or two of grinding away. The smartest entrepreneurs can anticipate when these downturns or upturns of success are about to occur, which allows them to adjust their businesses and tactics appropriately to maximize on their accomplishments or protect against periods of low success.
The closer you pay attention to how to measure entrepreneurial success, the more attuned you’ll be with your progress to the top of the peak, even when that progress is taking a step backward.