Director James Solomons published in the Sydney Morning Herald on Feb 3, 2015
It’s the halfway point of the financial year, and the start of the calendar year. School holidays are over, and business is picking up again. Now is the perfect time to step away from the frantic day-to-day of running your business, take a few moments to do a health check, and see how you are tracking against your ambitions. Here are nine quick ways to gauge your success halfway into the financial year:
1. Employee growth
Have you grown your small business headcount? Our latest data shows that the 158,000-plus small businesses using Xero in Australia have increased their payroll significantly in the last six months, a great metric for growth. If you haven’t been able to hire more full time staff, have your part-time or casual staff increased the number of hours they are logging? If this is the case, and business is picking up for 2015, it might be worth sitting down with some of your casual or part-time staff and discussing whether they would be interested in taking on a full-time role.
2. Employee satisfaction
Are your employees happy? If you are not measuring this, it’s a metric I recommend you start to look at now. There are various ways you can do this, but the main difference between them is that you can do it either anonymously or directly. What will determine which method works best for you and your employees is the size of your business. If you have just a few staff, anonymous happiness surveys generally won’t work too well as they can seem insincere. In a small business, engaging with and listening to staff is the best way to measure their satisfaction and progress. Ultimately, you need to make a judgement call on whether your employees are happier now than they were six months ago. If they are, you are on the right track!
3. Quality of work
Has the output of your team increased? Are you producing more, are you more efficient? Although measuring productivity will vary across different businesses, as a business owner you should outline a number of measurable areas to which you can ascribe each employee’s productivity. If the quality and productivity of your work is increasing, then you are well on your way to having a successful 2015!
The bottom line
4. Monthly cash flow
Is your monthly cash flow increasing? If it is the same or less as it was six months ago? Have you been able to reduce overheads? Or are there things you can do to increase monthly cash flow for the next six months? This is probably one of the quickest ways to check your business is on the right growth trajectory, so keep checking in on this figure.
5. Getting paid faster
Are you getting paid faster by your customers, clients, or suppliers than you were six, 12 or 18 months ago? Using online invoicing through Xero can help you get money in the door more quickly. With tracking, payments integrations, and automated follow-ups, technology can help you get paid and grow faster. We analysed data from 16 million invoices and saw small businesses reduce average time to payment from 48 down to 33 days. Although it’s a metric not measured by many small businesses, time to payment can make a huge difference especially if your business is operating on credit.
6. New clients or customers
There are two ways to grow a business: earn more revenue from existing customers, and add more customers. Have you been able to add new customers or clients in the last six months? If not, what can you do to attract more in 2015?
Have you been able to reduce overheads, or increase your profit margins? Whichever measure you use to track efficiency, if you want to grow, it should be increasing. The financial year half-year mark is the perfect time to look back over your expenses and outline a number of areas on which you can cut back. Even cutting back on small incidental expenses incurred over the past six months can make a big difference to your bottom line.
8. Business targets
I hope you have set some ambitious, but achievable goals for your business for this financial year. If so, are you at least halfway to achieving them? If you haven’t set goals, now is a good time. If you’re planning on creating some for the latter half of this financial year, make sure that they’re SMART — specific, measurable, agreed-upon, realistic and time-based.
9. Personal goals
Growing a business and creating jobs can be very fulfilling. However, it can take its toll on the business owner. Are you hitting your personal goals too? If you are not leading a happy, healthy lifestyle, your business will end up suffering in the long run. Look after yourself and your loved ones.