Guide to Small Business Analysis

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Small businesses don’t necessarily thrive at once, and if you’re just starting out, it can be difficult to see any growth at the earlier stages. Like we apply different variables to measure other things, we use small business analysis to measure growth. In fact, studies have shown that over 50 per cent of successful businesses constantly measure their growth.

By aggregating data, numbers, and other information, you can gain a deeper understanding and determine the actions required to grow it. 

Also, this data will help you choose the parts of your business that need change. Continue reading to explore the factors to analyze for small business growth.

#1. Operational Performance

One of the first things that come to mind when analyzing business growth is revenue and profit. By measuring total sales and revenue, you can determine how much profit the businesses made in the previous year. 

To measure these, you can consider metrics like average lines per invoice and new customer ratio. Using sophisticated analytics, you can also compare the current financial year to the previous one. 

Plus, you may need other information like competitor performance and market share to get a clear picture of the business.

#2. Market Conditions

While internal data can do so much, you need some information from external data to determine the performance and growth of your business. 

For instance, you should factor in the size of your market share and check whether it has grown. You also need to confirm any changes in your competitors’ market shares.

Since proper management lays the groundwork for future plans, keeping track of the marketing results is essential. 

The idea is to determine whether to measure sales market share, store traffic, number of inquiries or reduced complaint rates, or other metrics. 

With these insights, you can choose the changes that you need to make to be on par with your competitors.

#3. Data Visualization

To analyze business growth, data visualization represents information graphically and highlights patterns and trends to help you get insights. 

The Color, size, and shape of visual objects can also help you interpret the data and understand the condition of your business. 

From traditional pie charts and bar graphs, and gauge charts to line graphs, there are several options you can choose from. 

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Using data Visualization techniques and small business analysis, you can understand such complex data and notice patterns or anomalies.

#4. Employee Productivity

Employee productivity is another significant contributor to the growth of a small business. You can determine this by measuring their contribution toward revenue, profit, and returns. 

Just like most companies measure salespeople on the amount of revenue they generate, you can measure your staff’s contribution to the growth of the business.

Beyond this, you need to measure overall employee satisfaction and identify all the factors contributing to their productivity. 

This way, you can identify opportunities to increase their productivity and boost your business growth.

#5. Conversion Rate Optimization

Conversion rate optimization is another important factor that you can use to measure business growth. 

Since the conversion rate is concerned with landing pages, if there is any change, you need to rethink how to attract more people. 

If the number of people visiting those pages hasn’t changed, it’s important to check what’s happening.

#6. Customer Acquisition Cost

Since no company can thrive without customers, you need to focus on customer acquisition. 

According to Malte Scholz, CEO, and co-founder of Airfocus, it’s important to measure your customer acquisition strategies like email, cold calling, and social media outreach to see whether they are working or not. 

To calculate your customer acquisition cost, Your customer acquisition is the total customer acquisition expenses/number of customers acquired. It also involves calculating the total revenue you can earn from one customer.

#7. Businesses Income

Tracking your income and expenses is another way to analyze your business goals. 

Currently, several business management software packages can help you keep track of this and even see what others are doing. 

In addition to this, you need proper business analytics so you can project your income and make it better.

#8. Customer Satisfaction

Like employee satisfaction, measuring customer satisfaction is critical to the growth of your business. According to studies, 80% of customers will switch companies if they feel they are not satisfied. 

That said, it’s very important to conduct regular customer satisfaction surveys to determine if their satisfaction has changed over time. 

It’s also important to track and monitor important metrics such as lost sales and reduced website visits. This way, you’ll know whether your customers are satisfied and how to increase their satisfaction with your business.

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#9. Business Model

A business model refers to how a business is structured. It essentially means how you make money and stay ahead of the competition. 

While your business may be on the right path, you might be running a broken model that hinders it from thriving. That said, it’s important to analyze your business model to see if it still works.

#10. Monthly Recurring Revenue

If your business is subscription-based, you can analyze it using monthly recurring revenue (MRR). Instead of focusing on one-off sales, you can look at the total monthly revenue compared to the previous month. 

While monthly recurring revenue is straightforward, you’ll want to measure new MRR, expansion MRR, and MRR, which is the revenue lost from customers cancelling before their expected average customer lifespan.

 You are good to go if you combine this with business data analytics.

#11. Audit

Since success is the hardest thing to learn when you are on the right path, it’s crucial to audit your success and constantly check whether you’ve drifted from the right path. You must also check whether your business is thriving in the right way or not.

Wrap Up

To ensure that your small business is on the right path, it’s important to include every factor that’s aligned with your goals. 

You can start by doing a small business analysis on sales, revenue, and customer satisfaction and make recommendations based on the insights.

 If things are hindering your business growth, it’s important to develop a plan to overcome them. This way, you can learn from your mistakes and put the business on the path to success.

Ryan Erwin
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