In today’s business environment there is a wealth of information available to every business owner. Most business and web systems come equipped with robust and comprehensive analytics which allow data to be aggregated automatically and analysed easily. In addition, traditional accounting metrics still offer powerful insights into the financial health and position of a business, and social media has offered the world a new way to assess public opinion towards their organisation.
Focusing on the right metrics
The biggest difficulty for business owners today is not getting access to information, as they have this in abundance. The difficulty for businesses today is focusing on the metrics which translate directly to business success, rather than focusing on vanity metrics which give the appearance of progress or are only a byproduct of it.
In most cases, vanity metrics include:
While these metrics are an important part of the big picture, businesses can be performing fantastically on every one of those metrics and still be unprofitable, unpopular and financially unhealthy.
In contrast, the following metrics are valuable indicators of business success:
Net monthly cashflow
Net monthly profit
Monthly customer acquisitions
Social media engagement (comments, mentions & shares)
Email and phone enquiries
Returning website visitors
When a business is producing strong results on these fronts, they are typically in a financially healthy position and generating steady customer interest. It is therefore absolutely vital that a business owner creates a rationale for which metrics they will be focusing on, and why those metrics indicate success in their chosen industry.
Assessing market impact
While the information on market impact is not always readily available or contained in hard data, it is nevertheless an important part of measuring the success of any startup. The market impact of a startup is not just limited to the market share they have managed to attain (though that is an important element), it also includes:
Changes competitors have made to keep up
Changes in consumer mindset towards the industry
Increase in market size
Broadening of demographics
Changes in regulation
Disruptions to other industries
The ride-sharing app Uber is a fantastic example of a startup which had a huge impact on its marketplace. The popularisation of ride-sharing through Uber has led to a massive disruption in the taxi industry, has created a need for new legislation across the world and has seized a huge portion of the transport market with over 40 million active monthly users (across almost every demographic). While looking at the hard metrics would certainly indicate that Uber has been successful and massively popular, ignoring the market impact and other soft considerations could lead an analyst to underestimate the startups cultural significance on a global scale.