How is a business success determined?Explain.
Sure, healthy revenues and your break-even date are helpful barometers of business activity and customer engagement. But they don’t paint a full enough picture on their own—especially in the beginning, when you have no idea how the market will respond to your offering long-term and your overhead expenses are likely still lower than they’ll be in the future.
So here’s a better way to look at it: The true measure of success as an early entrepreneur is how much you’re learning—about your clients, your offering, your market, your business, and yourself. It’s not about how correct your original planwas, or if things are going “just as you expected”—it’s about learning what you couldn’t possibly have known beforehand.
Early success is also not about acquiring customers—it’s learning why those customers signed on and why others chose not to. It’s about getting feedback on what parts of your offering need improvement, and learning to turn feedback into a better product. It’s about understanding how your business influences the marketplace. It’s about knowing, through first-hand experience, what you like about working for yourself and what you don’t; where you add the most value to your business and where you are consistently wasting your time.
OK. You’re still probably wondering how learning and knowledge can really be more valuable than stellar sales results. Here’s how: If you don’t know why something is working, then you won’t how to respond to inevitable changes in the marketplace. But the more you understand about your business, your industry, and yourself, the better you’ll be able to successfully adapt to those changes and create a business that will last.
So the next time you want to evaluate your progress, put aside the metrics and instead ask yourself how much you’ve learned. What do you know that you didn’t before? What do you still need to find out?
As you’re reflecting, here are a few questions to try to answer:
• Why are people buying it?
• If they are recommending it to others, what are they saying?
• Why aren’t people buying—especially those who inquire but don’t purchase?
• What are the most frequently asked questions that you are getting about your product or service?
• What features seem to be getting the greatest response or reaction and which the least? Why?
• Are your customers who you expected they would be? How are they different?
• How do they hear of you and how do they share information themselves?
• What problem are they seeking to solve by using your product or service?
• What is important to them?
• What have you been surprised to learn about them?
• How has your experience of entrepreneurship compared to your expectations?
• What are you surprised to learn that you like doing?
• Which of your new tasks do you not like as much?
• What have been the greatest sources of anxiety and joy?
• What has the experience of managing yourself been like?
• How do your customers consider your offering to stack up against others?
• What trends are emerging in your market?
• How has the market changed over the last 12 months?
• How much do you have to educate customers about your market?
• What are the stereotypes and misconceptions about your market?
Entrepreneurship is a lot like being a student in a pass-fail class. It’s not your job to be perfect—only to get a lot out of the experience and learn as much as possible. So no matter what stage your business is in, consider what you’ve learned as a crucial measurement of your success.
SIGNS OF SUCCESS
1. Your company earns money while you're on vacation
Going on vacation and earning money at the same time means you have built a company, not just a job.
”I started my firm 10 years ago," said Paige Arnof-Fenn, of Mavens and Moguls. "For my 40th birthday, my husband and I celebrated by taking a month off. I honestly did not know if I would have a business to come back to. When I returned, I realized that my company had not just survived but thrived in my absence.”
2. You show up on the first page of search results
The new main streets for the digital age are search engines like Bing, Google and Yahoo. Some business owners feel that when they organically show up on the first page of their favorite search engine, they have made it.
“I knew my business would be successful when I made it to the first page on Google for a bunch of highly searched, highly profitable keywords," said Bill Elward of Castle Ink.
3. You change a customer’s life
Most small business owners seek to make a difference in the world through their businesses. When a customer writes to tell you the difference you have made in their life, it's one of those moments.
“Following the launch of our I-Ease eye drops to help relieve dry eye, a long-term sufferer of the condition called me to express her gratitude for our product," said Dr. Greg Maguire BioRegenerative Sciences. "[She said it] has changed her life.”
4. Clients find you
People you do not know and never contacted you are now buying from your company.
“My moment of truth was the first time I got an online sign-up from someone who had used our services…and hadn't spoken to anyone on our team," said Shawn, of Stratus Prep. "The idea that someone would make that kind of investment without any prior knowledge of the company convinced me that we were on the right track.”
5. You know you're not alone
When you finally realize that many other owners share the same problems as you.
"We had 200 women join my meetup for mom entrepreneurs only six months after launch," said Jill Salzman of The Founding Moms. "I knew in that moment, checking the membership numbers (and hoping for six or eight people in there) that I was really onto something.”
6. Customers refer you
The highest compliment is when one of your customers refers another person to your business.
"When our first major client's CEO told me to my face that we were the best driver-retention solution he'd ever seen," said Tucker Robeson of CDL Helpers. "[He said] he would help me in whatever way he could to get us new customers."
7. You bounce back
When you go through bad times and you are able to bounce back to success.
“I knew I could make my business work after hitting rock bottom and then defying the odds and getting my business back in shape," said Lauren Berger of The Intern Queen. "Today it's healthier than ever before.”
8. News media takes notice
A news article helps to get the word out, and it flushes out other “believers” besides you.
“I run a handcrafted gemstone-jewelry business, started in late 2002," said Bonnie, of Calico Juno Designs. "In early 2004, after our jewelry was featured in a national fashion magazine, I received so much business from it. (I made more money, in two months' time, than in my previous whole year!)”
9. You fire customers
When your business is successful enough, it can let go of customers that are unprofitable for your business.
“About three months after we started the company, we were working with a new client who asked for our help with three different positions," said Jeffrey Weinstock, of Rhodes & Weinstock. "His first request was for an executive assistant. He called and said 'I forgot to tell you, when you send me candidates, they all need to be young women.' I am an attorney, so I spoke with him about why he could not make that request. He apologized.
"A few weeks later we were working on finding a COO for his company. He called and said, 'I forgot to tell you. We are now a religious organization, so when you send me resumes please tell me each candidate's religion.' We immediately agreed to fire the client."
10. You achieve cash-flow positive
This holy grail gives the business the time to succeed and reinvest its profits for future growth.
“We launched our business in Jan 2009," said Mike Scanlin, of Born to Sell. "[It] took 18 months to build the product, which we launched in July 2010. Four months later, we had gained enough subscribers to be both cash-flow positive and profitable.”
11. Publisher asks you to write the book
Even in the digital age, when you write a book, you instantly add to your company's expertise.
“A book publisher asked me to write a book sharing my experience in how to run a Web-design business," said Jim Smith, Blarneystone. "My older brother told me when...you are asked to write about running your business, you become an expert in the field.”
12. You get that first paying customer
When someone pays you for your product or service, there is nothing like it.
”My moment of truth was signing up our first student," said David Greenberg, Parliament Tutors. "We now have 500-plus tutors in more than 20 states and 80 cities.”
Five Ways to Measure Success in Your Business
After many stressful days and sleepless nights, your business has finally become a reality. Now you are faced with the big question, "Will my business be a success?" While only time will truly tell, there are five simple ways to gauge whether or not your business is on the path to success.
Profitability is probably the first thing people think about when measuring success. Is the business making money? This is fairly common sense — if there is money left after you have paid your monthly operating expenses and debt, then things are looking pretty good. However, if you find your bottom line is continually red, your chances of success begin to dwindle.
2. A growing customer base
In addition to profitability, a growing customer base is a sure sign that you are effectively reaching your target market, and reaching your target market is what your business is all about. Without a vibrant customer base, your success will be limited, at best. The long-term growth of your company is tied directly to your ability to not only reach your customer base, but to expand it to accommodate your long-term goals. All of those long hours spent on the research and development of a marketing strategy prove themselves here. Did your research pay off?
3. Customer satisfaction
Customer satisfaction is an indication that your company understands the needs of your customers. Understanding your customers and being able to satisfy their needs is crucial to the strength of your business. Just remember, one unsatisfied customer can negate the promotional impact of several satisfied customers. Having strong customer service polices will add to the success of your company.
4. Employee satisfaction
Employee satisfaction is another key indicator of business success. Developing a work environment that rewards employees for their hard work is imperative in attracting and retaining quality employees. If workers know they are appreciated, they are much more likely to go the extra mile when needed. Employees are an indispensable part of your business. They are the face that greets your customers. Do everything within your power to make sure that face is a smiling one.
5. Owner satisfaction
Perhaps the most important measure of business success is whether you — the owner — are satisfied with the results of business ownership. Dissatisfaction is contagious. If you're not happy with your business, it won't be long before your dissatisfaction begins to affect the employees and even the customers. Every once in a while, carve out time for a reality check. Identify the sources of your dissatisfaction and make the necessary changes before it's too late.