A large number of businesses are focused on growth and have a clear vision of what this looks like.
Pinpointing the signs of growth is crucial in responding correctly (such as expanding your operations if your sales are increasing) and tracking progress towards your goals. If you have a specific growth strategy in place, it will also help you understand where your actions are starting to take effect.
We’ve created a step-by-step guide for measuring growth effectively in your business.
Start by defining your goals
The first step to measuring your growth is understanding what you aim to achieve. By defining your goals in advance, you can refine the metrics you need to monitor your progress.
Goals vary. Many businesses will emphasise increases in profit, revenue, sales volumes or market share. Alternatively, they may focus on business reputation (using review scores or sentiment tracking), customer retention rates, brand awareness, etc.
You could also work towards more than one goal. There’s no problem with this, especially if they work in tandem, though it’s sensible to choose a few objectives to give a clear focus rather than doing too many things at once. Typically, you’ll want to select targets that make the most sense for your business vision.
Once you’ve chosen your goals, note them down formally so you can continually refer to them.
Collect data
With your growth goals in place, consider what data you need to collect to measure progress.
The data you need will typically depend on what you’re tracking. For example, if one of your goals is revenue growth, you will need access to your latest accounts as well as your sales forecasts and how accurate your forecasting is compared to reality. If you’re monitoring market share, you would need information about your sales and broader statistics about sales volume in your industry.
It’s essential to understand what data will lead you to your desired findings and where you will get it from to ensure you have access to everything you need.
It’s usually better to get as much data as possible as it enables you to build a larger picture of your progress. However, you may also want to restrict your tracking to a specific timeframe (for example, the last 12 months or a rolling 6-month period), so you only need to collect information for this period.
Consider the context
While data is integral to observing the growth of a business, it doesn’t always tell you everything. There are several contextual factors at play when a company grows – or doesn’t grow.
For example, a month of increased sales might spell that a business is expanding. However, if that month coincides with a peak season or event – such as Christmas – the increase may be temporary.
Similarly, if you have been experiencing bouts of growth that suddenly stalls, it doesn’t necessarily mean you’re declining. It could just be a temporary setback caused by external factors.
Understanding the context behind your data allows you to determine better if you are truly growing. It’s also sensible to utilise more extensive periods of data (for example, this year compared to last year), as this will account for the natural trends in your business and enable you to compare.
Remember, growth is never linear or will it exactly match your plan.
Measure regularly
Growth should be a constantly evolving picture in your business. As such, you need to track it often to witness changes as they happen.
It doesn’t take long for your progression to take the wrong track or start to decline. By frequently reviewing your performance, you will identify these instances promptly and take decisive action to get your growth back on track.
You will generate a clear image of your growth long-term as it adapts by continually tracking your progress.
Recording all this data will enable you to find trends as well as help with predicting any future trajectories for growth. This all helps to support your planning around timeframes and targets.
Plot your next step
Once you are monitoring your growth, it’s time to plan your next move.
If you’re on track to achieve your goals, you should only need to continue full steam ahead while doing what you can to avoid any barriers.
If you’re not performing as expected, it’s time to revisit your growth strategy and determine its effectiveness. This may involve adjusting timeframes or implementing new tactics that fuel growth. Similarly, it’s worth spending time identifying any potential issues and trying to remove them.
If your growth is going better than expected, it could be a sign you’re ready to take on some more significant challenges that level up your business.
Conclusion
Measuring business growth is essential to how you grow as a business and achieve your goals.
By having specific targets and objectives to work towards and regularly collecting data, you will be able to monitor your growth trajectory, allowing you to make the right moves to accelerate it or intervene if things aren’t going according to plan.
With the ability to make informed decisions and understand when you have hit your targets, you will plot a growth strategy that drives you towards your ultimate business vision.
External finance is often required to fuel growth and help you achieve your goals. If you are looking to secure funding to progress your growth goals, we will help you identify solutions for your business.