Rounding the curve, the driver speeds toward the finish line. With a glance in the mirror to see the competition far behind, victory appears within reach — when, all of a sudden, the car runs out of fuel and slowly crawls to a stop. There’s more to driving a car than just watching the road — even the best need to watch their gauges. Successful drivers master balancing their time between planning for the road ahead, maintaining awareness of their position and keeping an attentive eye on their dashboard.
Running a business isn’t much different. Entrepreneurs must drive their business forward while maintaining awareness of capital, market share and customer satisfaction. Take your eyes off the road for too long and you risk being overtaken by competitors. Neglect the dashboard and the business could fall short on capital, miss the mark with customers or, worse, knock your business out of the race completely.
Data is the new dollar; information is a valuable commodity. Businesses large and small can benefit from gathering and utilizing relevant data. Data means different things to different people. Spying on customers is a poor way to build trust and a good way to build a bad reputation. For the ethical entrepreneur, collecting and using data means looking within. Insight into your own company can provide volumes of information that helps drive your decisions, and your business, in the right direction.
Capital, cashola, greenbacks — call it what you’d like, but your cash flow is the fuel keeping your business in the race. Just like with a car, run out of gas and you’ll wind up sitting stationary, unable to move forward. Successful entrepreneurs want to do more than keep fuel in the tank — they want to understand the limits of their cash flow gauge. Similar to the way average miles per gallon helps drivers plan a journey, understanding potential productivity per dollar can help business owners plan for more.
History is an excellent teacher. Rather than adopting a reactive posture and filling your tank when it hits E, utilize your existing data and plan refueling stops beforehand. Successful entrepreneurs understand how to read their fuel gauge, checking it often. Understanding cash flow helps with managing income and expenses, debt and company growth.
Placement matters. In business as in racing, there is a big difference between finishing first and placing last. Beyond winning and losing, understanding current market share may help entrepreneurs make decisions to grow their footprint. The first step is determining your own market share, so break out the calculator. To determine market share at the simplest level, use the following three steps:
1. Define your industry. Who are you and who are your competitors? Do you sell comic books? Run a law firm? Which market do you serve? Defining the specific category of businesses you belong to will help in determining your personal market share.
2. Determine overall industry revenue. How much revenue does the industry to which you belong earn over a set period (per quarter, year, etc.)? With this data, you can then find which portion belongs to you.
3, Find your market share. Using the same period, add up the total for your own revenue. Dividing your total revenue by total industry revenue for the same time span offers general perspective as to the percentage of market share you control. (Your entrepreneurial revenue / total industry revenue = your market share.)
Market share can grow and shrink and just like your financial fuel gauge, it needs to be checked often. Your market share gauge is a good barometer for tracking the effect your decisions have on the marketplace. By tracking shifts in market share, entrepreneurs can identify calls for action and respond accordingly.
Customers are the driving force for business. Take away the customer and (for the most part) you take away the revenue. After that it’s only a matter of time before the financial fuel gauge is on empty, the black flag is out, it’s off to the pits and out of the race. Today, measuring customer satisfaction goes far beyond receiving a letter. Many recommendations for gaining an understanding of customer satisfaction are available. Generally, these include measuring customer loyalty, their satisfaction with your brand and the ease of their experience.
If a customer tells two people about your brand, and they each tell two people … Creating referral programs can help drive sales but to help put a number on it, simply ask your customers how they feel. Surveying customers can help demonstrate their willingness to recommend your business or service to others. How happy are they with your business? How likely are they to recommend it? Are they likely to return? Surveys can be conducted online, through email campaigns and through a number of other methods. With this data in hand, areas for improvement or development may become clear. Are you losing customers due to poor communication, or are you gaining customers thanks to a simplified checkout process? Drive business to yourself, not toward your competition.
Starting a business takes risk — running a business takes work and keeping the lights on takes money. Entrepreneurs need to plan for the next seven steps while simultaneously living in the now. Draw from experience, respond to environmental changes and plan for the future while keeping an eye on your dashboard. Create limits to set off your own warning lights when finances, sales or customer satisfaction fall too low. Track the outcomes of your decisions with access to quantifiable metrics detailing their impact in real-time. With the right systems in place, a quick glance at your dashboard will offer incredibly valuable insights.
Success starts with adopting a winning mindset. Begin a simple worksheet to build a dashboard for your business, and gain access to intelligent financial insights from the existing data you have within reach.
This article was originally published in: https://www.forbes.com