The process of starting a business can be difficult, with lots to consider like funding, staffing, workspace, market capitalization etc. After the business takes off, these concerns don’t just go away and you might even have more to deal with.
So, what can you do?
In this post we share some simple tips you can use to know the status of your business, putting you in a better position to make informed decisions.
Observe Revenue Growth
As a startup, don’t expect to see an immediate spike in returns on your profit and loss statement – that would be asking for too much. But the state of your revenue actually tells a lot about the performance of your business.
If you consistently record low revenue and increased losses then you know that something is going wrong. The primary aim of any business is to make profit and if your business isn’t doing that it’s in danger of running aground.
If, however, you notice that revenue growth only increases by a few percent that’s not bad at all. That’s your company taking baby steps, and it should grow sooner or later.
Look into Your Cash Balance
Another way to see if your startup is doing well is to look at your cash balance. A financial health check will give you further insights, even beyond your revenue stream.
If, for instance, you are the type to invest revenue back into the business you will find how this hurts your startup. This practice can make your startup rich in terms of assets but struggling with little or no cash at hand. To run a business effectively, you need that cash.
Also, taking a close look at the books will help you know if there are outstanding checks, deposits in transit, accounting errors, and so on. You want to do this regularly to ensure everything works as it should.
See How Often You Service New and Repeat Customers
Are you attracting new customers or are your repeat customers all you can boast of? You need to have a database of clients and track their interaction with you to be able to tell the difference.
If you’re not bringing in many customers, then this is a sign there could be something wrong with the structure of your business. More customers mean more income and higher chances of growing and expanding in the foreseeable future and vice versa.
You need to check if the problem is with your marketing, customer service, pricing, competitiveness, and whatnot. And you need to do it fast, because if your customer-base is not growing there is no way you can grow as a business.
Measuring the health of your business is more important than anything else. This is what determines growth, performance, and success along the line. Take the time to review your business regularly, even though it can be tasking.