Running a business can take every ounce of your strength for little reward.
But then, suddenly, you’ve made it. You’re there. You still struggle sometimes but that initial fight is over. You’re accelerating, not wading through mud.
That’s when you know your business is a success. And here are four signs that it might be just around the corner:
• You’ve stopped worrying about money
• You have a mixture of repeat and new customers
• People are talking about your business
• Your people love working with you
You’ve stopped worrying about money
When you first start out in business, you can feel more like a mountain climber than an entrepreneur. You feel you’re constantly struggling uphill financially, and every time you think you’ve reached the summit, another twist appears.
When you’re on the verge of huge success, it doesn’t feel like that anymore. You still face hurdles, but you’ve already reached the top of a peak.
The major markers are:
• Your cash flow is consistent
• Your profit margins are healthy
• Your expenses are trim
• Your sales pipeline is robust
You’ll also have reasonable cash reserves in the bank as a buffer.
How much depends on your historical spending.
How much does your business spend each month? Your expenses are your gross burn rate – so if you spend Dhs35,000 every month, your gross burn rate is Dhs35,000.
That’s the cash amount you would need to keep your business afloat each month. It’s a good starting point for figuring out what healthy cash reserves look like.
The stronger your sales pipeline, the lower your cash reserve needs. Say you spend Dhs35,000 every month and make Dhs55,000 in sales. Your net burn rate is +AED 20,000. That means your business earns Dhs20,000 more than it spends – providing a buffer for future success.
Reaching this point is crucial. The bottom line is this: you can’t be successful long-term if you’re not making money.
Feeling free from financial burden positions you on top of the mountain looking down, where you can survey the business and make clear, perspective-based decisions.
You have a mixture of repeat and new customers
In the early days, most customers are new by default. Hopefully you’ll then continue to acquire customers.
It’s natural to focus mostly on acquisition as you build the business. Studies show that top performing new businesses acquire more new customers than their peers. That’s not surprising.
But there’s a problem. Customer acquisition isn’t the only marker of success. If you’re losing customers at the same pace as you’re acquiring them, your business model isn’t sustainable. It’s a ‘one in one out’ policy.
That is unless you also focus your efforts on customer retention, to secure repeat business and not just new business. Repeat business matters because:
• Acquiring a customer can be up to 25 times more costly than retaining one
• Increasing customer retention rates by 5 per cent increases profits anywhere from 25 per cent to 95 per cent
• Building a solid repeat customer base is a major sign of business health. If you’re looking at a good mixture of both, that’s a good indicator you’re on the right track to becoming a major success story.
• Repeat customers can be responsible for 40 per cent (and often a lot more) of a company’s revenue
People are talking about your business
When you first started your business, you probably had dreams of making a huge splash. But then, like most business owners, you may have only made a tiny ripple.
That’s about PR.
There are many strings to building a business. It’s not just a PR game (in fact, focusing too hard on PR without cementing your foundations can be a major pitfall) but PR is still crucial.
Businesses that experience massive, explosive success very rarely do so without making waves.
Look at Uber’s journey. Unheard of until 2012, interest in Uber grew slowly – their ripple – until around 2014, then exploded. Their splash.
Likewise, Netflix. Their ripple spread slowly outwards from 2004 until 2010, then interest surged.
Your business needn’t be an Uber or a Netflix to learn from that trajectory. And although it’s not the only path, having people talking about your company is a good sign your business is on the brink of success.
Your people love working with you
Unless you’re a solopreneur, you’ll eventually have people working in your business. At first, those people might seem like a means to an end. The office manager who keeps things ticking over: the customer service rep who handles calls.
But those people are your business.
Businesses that achieve impressive success also typically value their people and treat them exceptionally well. In turn then, their people love working for them, are happier and more productive.
The most engaged teams have…
• 21 per cent higher productivity
• 22 per cent higher profitability
• 37 per cent lower absenteeism
• 65 per cent lower turnover
…compared to the least engaged.
If you’re consistently scoring high on employee engagement, that’s a really good sign. It’s not the only marker of explosive success – but it’s an important one.
As a business owner, it can be difficult to tell when success is round the corner. It can be tricky to see past the stress and struggle of growth – and even tempting to give up, before you realise your full potential.
These four signs should help you understand whether you’re on track.
By Anisha Sagar, GM of Business Incorporation Zone (BIZ)