If you’re running a business, you owe it to your investors, employees, customers and most of all to yourself to understand it. The better your understanding, the better and more informed the decisions you can make.
Today we’re taking a look at some of the key ways you can boost your understanding of your business in 2020.
Market Research
It’s important to understand how other people see your business: if you want people to spend their money with you, you need to know how those people think about your business, and why they think that, as well as understand some of the factors that are affecting how much money they have to spend and where they spend it.
A market research company can help here. Regular (or even continuous) brand tracking surveys can help you see how your decisions impact your brand, with those that help to communicate the core values of your business more clearly to your customers strengthening it, and those that seem to contradict the values and qualities your brand is built on confusing customers and weakening your brand.
If you understand what your brand is – how customers see your business – you can optimise your decisions, leaning into the outcomes that build brand strength.
Capacity
One of the key things you need to know about your business is the capacity of the different people or departments that make it up. If you don’t know, fundamentally, how much work your business can do, you don’t know how much money you can make.
Failing to understand your capacity means you could either take on too much, which leads either to resentment and burn out in your employees or breaking the promises you’ve made your clients. This could be costly in financial terms, if you need to pay penalty clauses in your contract, but the currency you’re really spending is your reputation: let people down too often and they won’t come back.
You can find out your operational capacity reasonably simply: multiple the number of working hours in each day by the number of people working for you. The key is then knowing how many working hours each task takes, and how much they are worth! This only comes with experience and research, so it’s well worth thinking about.
How Much Money Do You Keep?
Some of the key financial metrics we often talk about in business are profit and revenue: money coming in. You can also look at your costs: rent, wages, raw materials. Perhaps more important is how much revenue you keep. If your stream of money coming in is whittled away in refunds or goodwill gestures to customers who have had bad experiences, you’re losing out significantly.
Investments in revenue protection might look like they have no direct effect on your bottom line but if you measure you much you lose to refunds over time, you’ll see how your efforts improve your financial metrics!
