Starting a business comes with its peculiarities and idiosyncrasies. The thought of starting up a business comes as an easy task to us however, it takes hard work to create and manage a business to a successful stage. Thus, it is necessary to ensure that the growth of your business is monitored and evaluated frequently. Indicators of growth in your business are simply the metrics used to determine how well your business is performing. Understanding the relevant growth indicators of your business helps you as the owner and manager to fully recognize the dynamics of your business. It also helps you determine if the performance of your business meets your expectations.
There are qualitative and quantitative growth indicators of businesses. Both are necessary and should be considered to ensure the sustainable growth of your business.
Qualitative growth indicators are indicators that cannot be quantified, i.e., these are the type of growth indicators that are not measured in numbers. Customer satisfaction, customer loyalty, good business reputation, good customers’ reviews, etc. are some of the key qualitative growth indicators of businesses. These metrics are very crucial as they help measure how well the business is doing and the business’ growth potential. Positive, honest reviews from your customers help recognize how well your business is doing. The level of loyalty maintained by your customers towards your business as well as the satisfaction your customers derive from your products/services are important metrics for your business’ growth.
Quantitative growth indicators are measured in numbers. The quantitative business growth indicators are the most concentrated on due to their popularity. Sales growth, cost of production, gross profit growth rate, customer retention rate, inventory level, labour turnover rate, improving cash flow, operational performance and productivity, assets efficiency rate, etc. These variables are some of the key quantitative business growth indicators. Rapid sales growth rate, falling or declining cost of production, increasing gross profit margin, high customer retention rate are indicators of a growing business.
Business owners should pay keen attention to these metrics as they help assess the growth rate of their businesses. Frequent review of these metrics provides key insights on the relevant aspects of the business that should be improved on. It also helps to highlight the unique selling points of businesses.
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