How do you know if your small business is doing well? Is it based on budget vs actual? What if you set very conservative goals and blew them out of the water? Conversely, what if you set very aggressive goals and missed them by a long shot? How do you assess if your business is doing well?
No Report Card
You don't get a business report card so it is hard to tell if things are going well for your business. Wouldn't it be great if someone told you if your net profit is a certain amount this year your business is doing well. Many small business owners are very competitive. However, they struggle with the evaluation side of things in business. Not many very small businesses get ranked against their competition. Small business owners are competitive by nature and yearn to be evaluated. The reality is that doing well means different things to different people.
What would good mean to you? People talk a lot about certain sales levels but not much about profit. Why people obsess with sales instead of profit I will never understand. If I do $2 million in sales but spend $2.5 million am I doing well? That really depends upon the business. Many businesses have to show a certain sales growth in order to even consider going public so you do hear a lot about sales. I am a profit guy; I define good as the bottom line. Determining if your business is doing well starts with you and your goals.
What are your goals? Not just your sales and profit goals but the bigger picture goals. Where do you see yourself in 5 years? 10 years? More importantly why? What is the real reason you are in business. Many people don't know the answer to this simple question. Some people are in business and work because it is all they know. However, dig deeper and define the real reason you and your business exist.
Good For Whom?
Is your business good for just you? How about your employees? Do you consider what your business does for the economy?
Your business can't be just about you and your goals. Incorporating dreams into your business is important on many levels. You need to think about other people and things that interact with your business as well. It is important to help your employees realize their dreams. Helping an employee reach their dreams will keep them happy and will also help you retain them. Why would they not want to work for a business that cares about them and their dreams?
It is important that your business be good for the economy. Are you adding jobs to the economy or taking them away? Are you giving back to your local economy and community? Business owners have a bad reputation for being greedy. Those that are not greedy end up with a great business culture that is good for the economy. While it is important for you as a business owner to get paid, it is also important to give back to your employees and the economy.
It is really hard to determine if your business is doing well because the question is a matter of opinion. Just because you are turning a profit or making a crazy amount of money does not necessarily mean that you are doing well. Determine what good means to you, align your business with those goals and execute.