Success is something of a subjective word, and it can be measured in multiple ways depending on your business type or industry sector. It’s important to identify what will make your business a success, and focus on this to drive your business forward. Below we have listed out how to measure success.
The different ways of measuring success
Generally, the highest level of success is measured through profit, depending, of course, on the industry that you are in. But this is not the only way to measure success, and some businesses may find that brand awareness, or if you’re a charity, impact, is what has the biggest benefit to your organisation.
There will also be multiple ways that you can achieve the desired success rates of your company and this will, again, differ from industry to industry. For example, one business ranked profitability as a way that they could measure success. They believed that keeping employee turnover low would help them to increase customer satisfaction and therefore achieve their goal, but quickly realised that some stores with high employee turnover were among some of the most profitable.
It was the businesses that had the lowest manager turnover that had the highest levels of profitability, and so they shifted their focus towards retaining managers. It wasn’t manager retention or customer satisfaction that was their ultimate goals; it was profitability. But they could use manager retention and customer satisfaction as ways of measuring success, which ultimately allowed them to measure the profitability of their business.
It helps to break down the way in which you measure success rather than setting a general aim. “To be profitable” is not an easy goal to measure, and therefore it’s hard to say whether you are successful or not. “To have a 10% profit margin in this fiscal year” is a clearly defined measure of success which you will either achieve or not.
Again, it is important to think about what really matters most to your business, and narrow this down to a few measurements of success. Every business wants to be in profit, have great brand awareness, cause a big social impact, but in reality, it will be hard to achieve all of these aims.
Other ways that you might measure success are through the schedule of a project, the scope of the work at hand, a budget that you have set, team satisfaction or the quality of the work or product that you have produced.
Achieving your goals
To properly measure success, you need to set goals. It may be a small, week-long project, or it may be a five-year plan, but regardless of what it is you want to achieve, you need an effective way to measure success.
The most common way of measuring success is using SMART goals, which are goals that can be applied to however you want to measure success, be it through time, money, social impact, brand awareness, or something else entirely.
Specific – your goal needs to be clear and specific, such as “to have a 10% profit margin in this fiscal year”
Measurable – you should be able to easily measure your goal
Achievable – your goals need to be achievable and not wild
Relevant – make sure that your goals are relevant to your business aims. If you are a charity, then perhaps your success should be measured by social impact rather than profit
Time-bound – set time limits for your goals. This will help you to be more accountable when trying to achieve success
Lead and lag goals
Lead and lag goals, or indicators as they are also called, is another good way to measure success.
With lag indicators, you will be examining things that have already happened and are out of your control. For example, if you want to see how many accidents there have been in a factory, you will consult an accident log.
You can use this for ways to improve things moving forward, which will then impact on your success. Doing this would make it a lead goal. For example, you may increase staff training, and you can then measure the success of this by seeing if there is a decrease in the number of accidents.
Lead and lag goals are useful ways to see where things are lagging behind in your business, and how you can introduce other measures to lead onto greater success.
Measuring success for your business
Every business is different, and you shouldn’t measure success based on how other businesses around you are doing. Every industry has different lead times or profit margins, and it’s important that you clearly define what success means for your company.