The Iroko Jump: How to Measure growth in your business.
There once lived a lizard that jumped from a tall Iroko tree to the ground and praise himself if no one else did. This lizard was obviously Okonkwo’s spirit animal in Chinua Achebe’s book, Things Fall Apart.
The lizard is your growing business. It’s very important that you know when to applaud yourself for growth. And it’s important that you can measure the height of the Iroko. What I’m saying is, there has to be some metrics from which to measure growth.
At Triift Africa, we are about the strides and leaps from tall trees, we love to see businesses grow from hustle to portfolio. Let’s talk about some important metrics you can measure to track growth in your growing business.
The Business Blood Test
Cash is to a business what blood is to the body. If a person bleeds out, they die. Blood tests are one of the most reliable ways to check for diseases in a person. If you want to know how healthy your business is, check the cash flow. How does the business get money? How long does it take for debtors to pay up? Does the business spend more cash than it gets? How quickly does cash come in and go out?
Cash is to a business what blood is to the body.
All these questions can be answered by preparing a simple cash flow statement. You can learn how to here.
Also read: More than just positive vibes only, your small business needs positive cashflow too.
Costs, Sales and Profit Margins
Nobody wants to run a business that is not profitable. So naturally, the profit margins of the business are a good way to track if it’s growing. The question is are you selling your products or services at the right price? Are you making the right amount of profit per unit sold? What’s The regular amount of profit made in a month or year? What percentage of total sales income is consumed by costs?
Have you read: Does your hustle pay? And other questions for small business owners.
The Business cost of Attraction
Business is about people. Yes you have awesome products and services but your business won’t survive if no one pays for them. So, how much does it cost you to get one new customer? Is it worth it? How can you tell? Divide the amount of money you spend on marketing by the number of customers gained. If the ratio is high, you might want to consider less expensive methods. We talked about it previously.
Read it here: How to get started marketing your small business in Africa
Happy Customers, Happy Business
It’s one thing to get customers, it’s another to keep them. If you can get the right people to patronize your business (right people are those who will pay, and in time); get them yo keep coming back and even bring more people, then you have hacked one of the secrets to business growth. Do you have loyal customers? What percentage are they to the total number of customers? How long do your customers stay with you?
Of course, this list is not exhaustive. What other metrics does your small business employ in tracking growth? Do share them with us. Did you learn a thing or two? Let us know by the claps you give (you have up to 50!).
We would also love to keep in touch with you. Send Triift Africa a DM on Instagram or Tweet at us. We’re also on Facebook.
Did you know we have a business finance class for entrepreneurs and freelancers where you’ll learn how to Raise money for that idea; Track and keep proper record of your money; Generate more ways to make money from your business and Learn how to cut down on cost and boost profit? Now you know! Just click the link to register for the next class.
