What are Business Metrics?
Imagine you are running a machine shop. You might use different tools to measure different aspects of your business like daily sales, inventory size, daily customer footfall, etc. Similarly, business metrics are tools of measurement that give you valuable insights on the performance and status of your business which further helps you identify strength, areas of improvement and give you directions to further run your business. For MSMEs understanding the right metrics for your business and efficiently leveraging them can be very beneficial for the business.
Types of Business Metrics
There are many kinds of business metrics which can be broadly categorized into umbrella terms like financial, operational, marketing and sales metrics.
Financial Metrics: Financial metrics help a business track and analyze the financial performance and health of a business. They provide insights into the sales, revenue generation, profitability, cash flow statements and overall health of a business. There are different types of financial metrics like the gross profit margin, operating profit margin, net profit margin, operating cash flow, current ratio, etc under this umbrella term of financial metrics.
Operational Metrics: Operational Metrics provide insights and evaluate day to day activities of a business. They essentially measure how efficiently your daily business activities are running. They could include metrics like production time, material wastage, delivery time or quality control issues, etc. By tracking these daily metrics you can ensure your business is running smoothly and avoid any impending problems.
Marketing Metrics: Marketing Metrics helps you access the status of your marketing campaign and their performance. With these metrics you can gauge how well your marketing efforts reach your target audience and drive your sales. Website traffic, Click Through Rate, Customer Engagement are a few examples of marketing metrics.
Sales Metrics: Sales Metrics helps you track the results of your overall effort and how much money it is bringing back to your business. Some key sales metrics to keep an eye on are Sales Volume, key conversion cycle, Customer Acquisition Cost, etc.
Why should you track business metrics?
Numbers tell a story! Tracking business metrics for an MSME empowers you with the privilege of making informed decisions for your business backed by legitimate data and insights. It allows you to assess performance objectively with proper data, helps identify key strengths, weaknesses and areas that have potential. It also helps in early detention of any probable threats or issues that might become a big problem. By utilizing and understanding metrics effectively you can allocate your resources strategically. It serves as a foundation for long sustainable business practice.
Upscaling your MSME Business with small business loan
By analyzing these numbers and recognizing trends, MSME owners can efficiently allocate needful resources to accelerate their business towards long term success. For instance a prolonged decline in production output may indicate the need for regular equipment and machinery check and maintenance. Upgraded equipment may hence improve the overall efficiency of production and lead to increased output volume and effectively meet growing consumer demand. Similarly metrics may also show that stocks of particular goods are frequently out of stock further indicating that expanding inventory of this good will give them the opportunity to capitalize on consumer demand.
In such scenarios where metrics highlight the need for capital, timely securing an MSME loan can provide the necessary financial push. This loan can function as a strategic investment that is pivotal for the resources required by the MSMEs to bridge the gap between current outcomes and future aspirations of the business. By carefully analyzing and thorough financial planning, small business owners can leverage unsecured business loans to catapult their business towards a prosperous future.
Conclusion
Running a business is a challenging endeavor. A business owner needs to be equipped with the right skillset and tools to ensure a successful and sustainable business run. An MSME business owner can gain valuable insights that empower them to make informed decisions, cultivate a loyal customer base, and ultimately achieve their strategic objectives by smartly tracking a select set of metrics that is relevant to the business. Navigating this journey for an MSME Business often requires additional resources. For an MSME owner aiming to propel his business forward, securing a loan can be a pivotal investment. A viable option for MSMEs are Non-Banking Financial Companies (NBFCs) that offer flexible and accessible financing options catering to specific needs of MSMEs. They provide benefits like faster approval times, simplified documentation process and a hassle free experience over a traditional bank.
