If you want to determine the success of your company, you need to measure company growth.There are a number of ways in which you can measure the growth of a company, but no "best way" to do so.In order to get accurate results, you must use consistent methods to evaluate all areas of the company.If you want to measure company growth, you should consider the following steps.
Step 1: You should have company objectives to determine progress.
You have something to measure against if you have goals to meet.Don't set yourself up to fail when setting your objectives.It's important to be realistic about what you can achieve.If you want to easily accomplish your objectives, don't lower your expectations.Both realistic and challenging objectives can be set.Increasing market share or retaining more clients are objectives that may be included in goals.You can split your goals into short term and long term goals, which can be achieved in under a year and over one year, respectively.It is a good idea to make your goals conform to the acronym SMART.
Step 2: Put together a business plan.
The objectives that you have for your company, as well as the methods you plan to apply in trying to achieve them, should be reflected in your business plan.If you have succeeded in achieving your objectives, you will need to consult your business plan to confirm that you followed the plan you set out.You should put together additional methods to measure the growth variables that you have selected.Key performance indicators can be taken from financial statements, sales figures, or other sources to assess the company's growth.
Step 3: You can hire an outside source to help measure company growth.
Your current business will be evaluated by this external service.A fresh perspective can be provided by having an outside consultant look at your organization.Consultants can be used to measure the growth of specific business metrics.Even the best statistical analysis ignores basic managerial problems that can only be solved by the company's leadership.
Step 4: Compare your company to others.
Measuring growth in comparison to competitors determines your success in the industry.You will increase growth within the company if you improve your reputation in the marketplace.If your competitors are publicly-traded companies, you will be able to find the figures you need in their annual reports, which must be posted on their websites.You can find what you need in press reports, trade publications, and media coverage of your competitors.If you are able to find them, be sure to compare performance ratios to industry averages.Search online for research in your industry.
Step 5: Do you know if your customer base has gone up?
You should be seeing better quality customers if you are looking for more customers.Your customer base should be making more money.You are trying to gain repeat customers and build customer loyalty.Customer lifetime value is a measurement of customer value.The figure is calculated by taking the average sale value and adding it to the number of repeat transactions and the retention time of each customer.The result of the CLV calculation should be regularly recorded by businesses.Customer surveys, purchase analysis, or immediate feedback can be used to measure this.Measures of these variables need to be implemented.
Step 6: Revenue growth is computed.
One of the easiest ways to measure company growth is revenue growth.The compounded annual growth rate is used to measure growth.This calculation is useful for showing growth over a long period of time.The final value is divided by starting value times 1 over the number of periods.The beginning value would be revenue in the first year being calculated and the final one being revenue.See how to calculate compounded annual growth rate.
Step 7: Determine workforce growth.
Track new hires and compare them to previous years.As the company grows, it should hire more employees.If you divide the number of new hires by the total of employees at the beginning of the year, you can express this figure as a percentage.
Step 8: Find your market share growth.
A company's share of the total value of their industry is called market share.It is calculated by dividing the company's total revenues by the total revenue in an industry over a period of time.The period can be a quarter, a year, or several years.Growth can be determined by calculating the company's market share in several different periods and looking for growth.In the past year, the market share of a company in a $1 billion market has increased by 2%.
Step 9: The company's book value should be calculated.
The book value is the difference between the company's assets and liabilities.It represents the net value of all of the company's property, or what it would be able to sell itself for if it were forced to liquidate quickly.To calculate book value, add up the company's assets, including current assets and debts, and subtract the outstanding bills and loan balances.
Step 10: Measure market size.
Market cap is a measurement of the total value of a company's outstanding stock.The current stock price is divided by the total number of outstanding shares.Market cap is the most common indicator of a company's size used by financial professionals.The information needed to calculate market cap can be found in the company's annual report.The market value of a company can be calculated.
Step 11: Look for cash flow growth.
Cash flows show how much money a company makes.Financial professionals use them to determine the value of a company.Discounted cash flow analysis uses future cash flows to determine a value for the company.Measure current cash flows against past cash flow to see if the business is solvent.Future free cash flows are projected for an investment or company.The cash flows are discounted back to the present at a set discount rate.The discount rate reflects the idea that money today is worth more than money in the future.The discounted cash flows are compared to the cost of the investment to see if it is a good investment.
Step 12: The price and PE ratio is calculated.
The PE ratio is the premium paid for the company's stock.The current stock price is divided by the average earnings per share over the last twelve months.The calculation shows that investors expect the company to increase in value in the future.A low value can mean lower or negative growth expectations.You can see how to calculate the PE ratio.
Step 13: The gross margin growth should be calculated.
The gross margin is the difference between revenue and cost of goods sold.The company is converting raw materials into finished products.As the company streamlines its production process, look for this metric to improve.
Step 14: Find the profit growth.
The bottom line of the company is net profit.All expenses and taxes have been subtracted from the company's revenue.Profits are used to pay dividends or reinvested in the company.The compounded annual growth rate is used to measure profits.This allows companies to show their growth over time.You can calculate CAGR for profits.
Step 15: Evaluate your staff and look at their growth.
Evaluate staff levels, turnover and performance to see if they have improved.Is there an equivalent increase in productivity caused by increases in workforce?Any department can be applied to.Sales productivity is calculated as the company's revenue is divided by the number of salespeople.
Step 16: Analyze the changes in your cost.
The customer acquisition cost is the amount of money you have to spend to get a new customer.The costs are divided by the number of new customers over a period of time.It is proof that you are building a brand.It can show you if you are spending too much on sales and marketing and not enough on new customers.