As your small business matures, you’ll want to keep an eye out for various milestones to help gauge your business’s performance. The ATO uses external benchmarks to compare small businesses with similar businesses in the same industry as a method to identify businesses that are avoiding tax obligations. It is a little more difficult for you to know exactly how other small businesses function internally. They could be on the brink of collapse, and you’d never know, not until their building goes up for rent again. That’s why we’re going to explore some internal small business benchmarks that can help you make sure your business is still on track for industry success.
Retaining repeat customers
One of the most important benchmarks are customer retention rates. If you’re not keeping your customers coming back for more, then eventually your small business will start to lose out to competitors. A good business knows how to get new customers consistently, but that can be expensive and unreliable. A great business can convince its customers to come back for more. Repeat customers are a reliable source of income without the extra cost of marketing or outreach, which means even better profit margins for you.
Some of the things you can do include:
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Providing customers with a unique experience that fulfils their purchasing goals.
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Maintaining a strong online presence to remind customers you exist.
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Focusing on improving your customer service.
Armed with those tools, you’ll be well on your way to greatness.
Anniversaries
One great way to benchmark the success of your small business is by looking at how long you’ve been in operation. The longer you’ve been around, the more likely it is that you’ll be successful. But there are other factors to consider as well. For example, businesses in certain industries tend to have shorter lifespans than others. So, if you’re a tech start-up that’s been in business for 5 years, you’re already ahead of the curve.
1 Year – While one year isn’t long for a business, it’s definitely an educational time for any new business owner. At the one-year mark, both challenges and successes may have come by to teach you more than you thought there was to know about running your business. That’s why we require a minimum of 1 year in operation to apply for our business loans. If those challenges haven’t scared you away, it’s a good sign for the future.
5 Years – Half of all businesses shut their doors in the first 5 years. While this doesn’t mean there’s just smooth sailing from here, you can celebrate passing the first major hurdle. Chances are you’ve found your niche and begun to perfect the systems and processes in your business. You’re really getting a feel for your industry and have the ability to identify other risk indicators that threaten your organisation.
10 Years – Once you hit 10 years, you’re in rare company. Only a third of businesses make it this far. To last this long, you’re probably doing something right. To avoid being part of the 25% that fail from here, find out what you’re excelling at and keep it up.
A strong business credit rating
Another performance benchmark you can track is your business credit rating. This number – which is separate from your personal credit score – will be used by lenders, landlords, and suppliers to help them decide if they want to work with you. If a lender does have a minimum credit score, you can get your business’ credit report from credit reporting bureaus rather than applying directly with the lender. It’s also a good idea to go through your credit report yourself. Sometimes things will be reported incorrectly or not reported at all. These mistakes can hurt your credit score so it’s a good idea to make sure everything’s in order. Once you’ve got your credit report you can also take measures to boost your credit score before applying.
A competent and well-trained team
Of course, your small business is only as good as the team you’ve assembled to help you achieve your goals. As your business grows, you’ll eventually have to expand and begin hiring the best employees to keep up with the increasing workload. That means hiring a team, training them well, and keeping them up to date on the latest industry trends. Your employees are an investment, treat them well, give them access to good training and fair compensation, and they will be incentivised to stay with you and care about your business’s success. Being able to take a few days away from work and trust your team will be able to handle things without you is one of the most relieving small business benchmarks to hit.
Your first year of actual growth
Another small business benchmark is revenue growth. You can’t keep operating a business without money, but starting a business is expensive and usually isn’t profitable until a few years after launch. Until then, you should still track your business performance and growth. If your business isn’t growing, it’s either not appealing to new customers or losing the ones it has. While they’re not expected to be positive for a while, keep an eye on your revenue numbers to make sure they’re increasing over time.
After years of hard work (and maybe some good luck), you may have finally reached a point where your business is generating real revenue. Congratulations! This is a huge accomplishment and a great benchmark to track your progress. Once you hit the green, it’s time to start thinking about reinvesting that money back into the business to help it grow even more.
These metrics are just a general guide; every industry is different. If you have any concerns about your performance benchmarks, you should seek professional advice. Hitting these milestones are important indicators of a healthy, growing business. If you’ve already done so, congratulations on reaching these benchmarks! See how Mooretrailers Finance can help you to grow your business.
If you are looking to generate working capital to provide your business with a cash flow boost, our team of equipment finance specialists can provide you with information and access to finance solutions to help you expand your business.
Do not hesitate to contact our team – we are always available to assist. Contact us, we’re here to help!
Phone: 0429 494 641 or submit an enquiry
Source: Ondeck