It’s a tough call, because in large part it depends on how you define “success” for your business.
So how do micro business owners define business success?
We know from research that Flying Solo published in Understanding Micro Business, 2008, that happiness for the solo business owner is not directly correlated with income.
So business success for the micro business owner has to account not only for financial results, but also for how happy they are in their work.
This special balance suggests five measures be among the essentials for the micro business owner’s scorecard.
Measure 1: Keep your funnel full by tracking number of new leads
It’s too tempting in bountifully busy times to be lax about finding new customers for the future.
Even if you believe that steady stream of customers will never dry up, giving a bit of attention to the front end of your funnel can help improve the quality of the customers you do get. And we all know how much of a difference that makes to how happy we feel in our work!
So one of the five measures for micro business success is number of new leads. Count the number of people who have waved their hand to indicate they want to know more about what you have to offer and train one eye on keeping that stream flowing strong.
Want more articles like this? Check out the measuring success section.
Measure 2: Easily convert leads to customers by tracking sales conversion rate
We don’t attract new leads for the fun and joy of feeling popular. We attract new leads to have a steady supply of fabulous customers.
Who wants to spend a small fortune and half their waking hours generating hundreds of leads to win a mere handful of customers?
That’s why another of the five measures for micro business success is your sales conversion rate. It’s all about how well you convert a new lead into a profitable customer. Just calculate the proportion of new leads that became customers. It will keep you asking, how can I improve the chances of a lead becoming a customer?
Measure 3: Get more done in less time by tracking productivity Pareto
As a solo business owner, your time is precious and like youth, you don’t get it back once it’s gone!
But don’t be duped into working harder and faster to get more things done. The kicker is to stop doing things that don’t matter as much as you might think! Define the 20% of tasks that you deem most important and delegate, simplify or obliterate the rest.
You can track how well you’re allocating time to the 20% of tasks that matter most, using the unglamourously named productivity Pareto measure. It’s simply the percentage of hours you work each week on your 20% most important tasks. Where attention goes, energy flows.
Measure 4: Have enough money to pay yourself and your bills by tracking cash flow
Cash is oxygen for your business.
Irrespective of how much profit your business is making, if its cash flow is chaotic, it can suffocate to death.
Essential for any micro business owner is to track net cash flow. It’s the total amount of cash that flowed into your business in a given period, minus the total amount of cash that flowed out of your business in that same period. Is your business breathing easy?
Measure 5: Balance life and work by tracking return on time invested
You may not want millions, but you do want to enjoy lots of free time. It’s why you work for yourself, isn’t it?
The only way to have a great lifestyle and a healthy bottom line is to get more out compared to what you put in.
Thus, quite a powerful measure for micro business success is return on time invested, or ROTI for fun. Take your net profit in a given month and divide it by the total hours you worked in your business in that month. This number signals whether your business is working for you, or you’re working for your business!
There are many results worth tracking in a micro business. But keep it simple by starting with the five suggested here and let your curiosity and common sense help you decide what else is worth measuring for your unique business.