Growth is the rate of change over a period of time. It is a simple math formula. But, if you are talking about measuring the overall “success” of your company, there are several factors you need to consider.
Establish Growth Goals
When you set goals for yourself, you have not only something to strive for, but also something to compare yourself to. Don’t set yourself up for failure when developing company goals. Be realistic about what you can accomplish in order to be successful. Similarly, don’t lower your expectations in order to easily achieve your goals. Establish goals that are both realistic and challenging.
Goals can include things like increasing market share or retaining more customers.
Consider dividing your goals into short-term and long-term goals, which refer to goals that can be accomplished in less than a year and those that can be accomplished in more than a year, respectively.
Making your goals conform to the acronym SMART is a good way to double-check them (Specific, Measurable, Achievable, Realistic, Time-Bound).
Create a Business Plan to Help You Stay on Track
Your business plan should reflect your goals for your company as well as the methods you intend to use to achieve them. When you have to measure company growth, you will consult your business plan to see not only if you have met your objectives, but also to confirm that you have followed the plan that you created for your company.
Put together additional ways to measure the growth variables you’ve chosen if necessary. Key performance indicators (KPIs) are measurements derived from financial statements, sales figures, or other sources that you believe are necessary to assess the company’s growth.
Engage the Services of an Outside Source to Assist You in Measuring Company Growth
This outside service will come in and assess your current operations. Having an outside consultant examine your organization can provide you with a fresh perspective that can identify problems that you may have overlooked. Consultants are especially useful for measuring the growth of specific business metrics using accounting or statistical analysis.
You need to know that even the best statistical analysis can overlook fundamental managerial issues that can only be addressed by the company’s leadership.
Compare Your Company to Competitors
Growth is important within your company, but measuring growth in comparison to competitors determines your industry success. If you improve your market reputation, you will eventually attract more clients and increase company growth.
If your competitors are publicly traded, you can find the figures you need in their annual reports, which are required by law to be posted on their websites.
You might be able to find what you’re looking for in press reports, trade publications, or media coverage of your competitors.
Note: When calculating performance ratios, make sure to compare them to industry averages, if available. Try looking for research in your industry online.
Determine Whether or Not Your Customer Base Has Grown
You should not only be looking for more customers, but also for higher-quality customers. Your customer base should be generating more revenue. This indicates that you want to gain repeat customers and build customer loyalty.
Customer lifetime value is frequently used to calculate customer value (CLV). This figure is calculated by multiplying the average sale value by the number of repeat transactions and then dividing the total by the average customer retention time.
The CLV calculation result should be recorded on a regular basis, and businesses should strive to increase it on a regular basis. Customer surveys, purchase analysis, or immediate feedback (“Is this your first time shopping with us?”) can all be used to measure this. These variables must be measured using systems that must be put in place.
Calculate Workforce Expansion
Maintain a record of new hires for the year and compare them to previous years. As a company grows, it should continue to hire new employees. This figure can also be expressed as a percentage by dividing the number of new hires in a year by the total number of employees at the start of that year.
