Do you know what impact you and your vegan biz are actually having on the world?
The word “impact” is sometimes used as a feel-good term in the business world, but I believe every business should have a quantifiable way to measure its true impact. The reason this is important for vegan businesses in particular is that so many of us started our ventures based on a passion or a dream to help improve the world in some way.
But sometimes impact can be difficult to measure, and that’s why I decided to write this article about how to develop metrics in your business that will help you gauge the impact you and your business are having, and guess what? This has a lot to do with those goals you’ve been working so hard at setting!
I know many people don’t like dealing with numbers. If you tend to lean into the creative aspects of your business, the numbers can feel like a bore. But I encourage you to keep an open mind; this is important work, and it’s kind of fun once you get your teeth stuck into it. Furthermore, since you run the business, you get to pick the numbers you’re working with.
Yes, you will need a financial metric in the mix, but metrics in your business should be focused on what YOU think is important. Often this process can help to fuel new creative ideas, or let you know when you need to think of something new because a previous strategy isn’t working anymore.
Step #1: Pick Your Impact
So, where do you start? The first thing to do is pick your impact metric. This will help you focus on what’s important to you this year. Once you have done that you can decide which other metrics you should track to help you see if you are in a position to hit your impact goal or not. This combination will also help you to assess the overall health of your business.
For those of you who are new to all this, I want to quickly talk about what an impact metric actually IS. Obviously the chosen metric will depend on the business and the owner, but some examples might include: number of clients coached, number of new products developed to displace non-vegan options, number of non-vegan patrons served, number of animals saved, number of free meals provided, or percentage of income donated to an animal sanctuary.
In short, your impact metric should be based on something you have decided is important to you in your business – something you would like to know your business is having an impact on.
Step #2: Choose Your Biz Health Indicators
Next you need to pick the metrics that will measure the overall health of your business. I normally start with metrics in these categories:
- Early Indicators: This is normally some type of lead-generation tool or process. Whatever you use to help identify customers and bring them to your business is the metric you should monitor. Since email is a reliable tool for driving sales, many businesses monitor daily or weekly email subscriptions as an early indicator of business health. If you are regularly able to convert 5% of the people on your email list into customers, then the idea is to continue to grow that email list with targeted prospects while maintaining the same conversion rate. You will be able to generate more income if you are able to scale your lead generation efforts (e.g. add more subscriptions).
- Customer Lifecycle or Experience: This metric will be closely linked to the type of product/service you offer. For example, some companies use surveys during the customer acquisition process to gauge customer feedback. In that situation the metric would be to ensure scores continue to increase over time. If you are a subscription-based company, your goal might be to expand the average number of months/years a customer is active.
- Sales Production: In my business, I’m all about conversion metrics. I want to know how many of the people who are engaging with my site, ads, emails or social media platforms turn into customers. When I am working on this metric I will often test two or three marketing campaigns simultaneously and monitor the conversions to make sure we continue to yield similar/better results. Doing this is very helpful for identifying successful new campaigns that we can then leverage across the business.
- Product Performance: When you take a look at your business, is one service or product significantly outperforming the rest? This is an important metric to look at objectively because it will help you to assess if you should be doing more with a leading product, or if you have an under-performing service that needs more help to reach its goals.
Financial Health: This is an easy one. I normally pick a number from a traditional income statement like Sales, Net Income or Operating Income to measure year over year variance by month. For example, are sales the same or more this January than they were last January?
- Efficiency: This metric should be about the productivity of your resources. In a small business it’s normally a good idea to focus on expenses or team productivity. In addition to comparing the increase/decrease of expenses over time, look at the correlation between sales and direct program expenses; there should be a proportionate increase in sales when there is an increase in expenses. Another good approach is monitoring spending efficiency, so take the time to regularly look at monthly fees to see if you can decrease your overall costs by moving to annual plans.
- New Projects: Any new goals that are project-based should have a metric linked to them so you can gauge successes or interim wins.
As you may be gleaning from the list above, the key to setting useful metrics is looking at your business process and determining what fuels your business pipeline. How do you know if your customers are happy? Or, how do you know if you will meet your sales goals? Common indicators include website traffic, newsletter subscribers, number of customer reviews, total email/phone inquiries, orders per month, repeat customers, product usage, appointments booked, etc.
By the end of the process, you should have at least three to five metrics to monitor. As your business grows, you might need more metrics, but if you’re starting out, don’t choose more than five.
Step #3: Make It Visible
Now, metrics are only helpful if you monitor them and use them to help you make decisions. So, after you have chosen your metrics, you need to develop a dashboard. This will be a way to monitor and track all the metrics you have chosen in one central place.
If you have the resources, hire someone to help you consolidate and report this information. This is the type of task I would recommend outsourcing. It shouldn’t take more than one or two hours per week, depending on the size of your business. I normally look for a freelancer to compile ongoing reports; this is a low-cost way to get the information you need.
Step #4: Decide on Your Triggers
If you are just getting started with this, your metrics should be anchored in your previous year’s numbers. I like to use triggers that let me know if we are more than 10% off the previous year’s numbers. For targets I like to look at 15% or 20% growth. However, obviously you need to choose numbers that make sense to your business and industry.
Step #5: Use It!
Now that you’ve put all this effort into setting and measuring metrics; make sure you’re using the valuable information you are collecting! Set time in your calendar each month to review these metrics – this doesn’t have to be a lot of time, but write it down to make sure it gets done. By monitoring your metrics each month, you will have the opportunity every 30 days to see if you are on track to hit your impact targets, as well as take a quick inventory of the health of your business.
If you find a problem (and at some point you probably will!), kick off a brainstorming session to come up with changes or updates that will help you get things back on track. Once you have done this once, you will see how easy – and how valuable – it can be. You started your business to make a difference in the world, and it’s rewarding to be able to plainly see how your efforts and investment are doing just that.
If you haven’t already chosen an impact and some business health metrics to monitor, take an hour and do so. Then, make a plan for how you are going to monitor and use the metrics you have decided on, and start to implement this into the life of your business.