By Christian Nellemann, CEO of XLN Business Services
Everyone who owns a business wants it to be successful. But how can you know if your business is a success?
One easy way you can sleep easier at night is by having well defined business objectives and then a way of measuring your performance against those objectives over time.
Defining success for your business is a critical step for any business owner. If you don’t know what success looks like, how will you recognise it when it comes along? For many, success will naturally be to meet simple financial goals: being profitable is by far the most common. But even if you want to be profitable, exactly how profitable? And what kind of accounting profit do you mean?
There are other financial success measures too: many businesses would consider themselves to be doing well by breaking even, or simply if they can keep trading while making a loss in the short term. It may be that other objectives are still more important to you: starting up the business, for example, or increasing your customer base.
For others, less tangible measure are vital: the quality of the product created, or the ability to have more time for family compared with employment. Your definition of success or targets or goals can be very specific and detailed or simple and broad.
Measure your performance
Once you have defined what success is for your business, you can now think about how to measure it. If you are looking at financial measures of success, it may be as simple as having a good accountant or finance director to make sure your figures are reliable and up to date.
Make sure you get access to information as quickly and as succinctly as you can — knowing how sales are going can make all the difference in how you spend your time, as can having a good idea of how much tax you need to pay. The time periods that you choose for your reporting can also affect your business — will staff be straining to meet monthly goals, or quarterly ones?
If your targets are not simply financial, think about who you would like to help keep you accountable to meet them — perhaps a seasoned colleague can help with setting sales targets or product quality, or a family member might help you think about how you use your time.
Review your performance
Whatever your definition of success and the measures you use, you should refer back to them over time to see if you are achieving what you originally set out to achieve. Even if you adapt your targets over time, you should replace them with new ones. If you wake up in ten years’ time and find you are CEO of a major corporation, but your original goal had been to work outside of an office environment, have you succeeded or failed? Only a good definition of success , appropriate measurement and a performance review can tell you.
When you review your performance, make sure you consider not just if you have met your target measures, but why you have or have not met them. It could be easy to simply meet your target one month, but if it was for a reason that will not happen again, you could struggle in the future. Likewise, if you invested time in future opportunities, perhaps next month will be better?
However you review your performance, beware of comparing yourself against others. Although you can definitely gain by looking at the success or failure of others, ultimately your business and its targets are unique and the only real measure of success is against yourself.
Christian Nellemann is CEO of XLN Business Services, provider of business broadband, phone lines, energy and card processing to 130,000 small businesses in the UK.
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