One of the surefire ways to fail in business is to ignore the numbers. Having metrics which you monitor on a regular basis can point you to where your business is failing before it actually happens. Let’s take a look at some metrics that can make a difference to your business:

Productivity rate: Keep track of the following to correctly estimate your productivity rate. If your productivity rate falls below 80%, then you are spending too much time on administrative tasks. The 80% of your time should be spent on revenue/ future revenue generating activities.

Hours worked: This is how many hours you or your employees spend working in a day.

Billable hours: how many of those hours worked did you actually get paid for by your client/ customer?

Development hours: how many of those hours was spent developing your business.

Monthly sales: It is wise to know what your total sales/ income is for the month. If possible this should be tracked on a daily basis. Over time you will be able to see a pattern develop and better plan for times your product/ service is not in high demand.

Net Profit:  This is your profit less all your expenses

New Customers: you want to monitor the amount of new customers you acquire and how they heard about you. Overtime, you will be able to see a pattern which will help you focus your marketing dollars.

Established customers: You need this to see how well you retain your customers. If customers are not coming back, you will need to know why as soon as possible so the problem can be corrected.

Average revenue of a customer: You need to know how much revenue one customer brings to your business over a reasonable period of time. Obviously some will spend more and some will spend less but keeping track of this will help you calculate the lifetime value of a customer. The life time value helps you know what the maximum amount you should spend in targeting customers.  The life time value will be discussed in more details in a later post

The retention rate: gives companies an indication of how well it is keeping its customers happy. It is known that acquiring new customers is 5 times costlier than retaining existing ones.

Marketing costs: Your marketing costs should be tracked for both new and existing customers. Marketing is the blood line of any business but yet is where I see a lot of entrepreneurs waste a lot of money. A lot of times people just go with marketing techniques they have always done without stopping to see how it is affecting their business.   This is one area you want to track and analyze carefully to make sure each dollar that goes out here comes back with a positive return. Track marketing expenses for new and established customers separately as this will give you an idea of how much it costs to retain a customer as well as how much it costs to acquire one.

Keeping metrics in your business, might seem like such a small thing but it could make a huge difference. Any business that wants to grow has to develop metrics.