Since 1800, more than 2,000 vessels and perhaps as many as 1,000 lives have been lost on a stretch of the West Coast known as the Graveyard of the Pacific. Before the advent of modern navigation equipment, sailors would slow their ship to a crawl when traveling close to the coast. They’d measure the depth from the bow of the ship using a marked line and a lead weight. A person would literally call (or sound) out the depths back to the Captain as the ship moved forward.
Indeed, not a task for the faint of heart.
So what does this have to do with small business? In essence, it’s all about measurement. Small businesses live and die by the decisions they make. Money and time are always in short supply and deciding to pursue one project over another can be the difference between success and failure; between safe passage and pershing in the depths. And that’s where measurement comes in. It is measurement—and making informed decisions with said measurements—that leads to small business success.
Here are a few ideas to help you weave measurement into your business…
Collect and Analyze Data
Collecting and analyzing data over time is one of the most powerful things you can do for your business, no matter what line of work you’re in. Look at sales figures and you’ll start to see trends you can act on. Look at expenses and you’ll start to see fat waiting to be trimmed. Collecting and analyzing data over time can—correction: will—lead to better business decision-making. And that translates into time and money saved.
So start small. Consider collecting data like…
- Original cost estimates versus what a project actually cost
- The time from when you invoice a client to when you get paid
- The amount of hours spent on each project
- The cost of heating your office month-on-month over the year
- How much money you spent on advertising and, if possible, how much business that translates to
If your business has a web presence, installing and using Google Analytics is a must. Google Analytics is a free, web-based application that essentially tells you about the visitors to your website and what they’re doing there. It can seem overwhelming at first, but once you get the hang of it, you’ll start to love it. Out of the box Google Analytics will tell you:
- How many people visited your website for given time period
- How they came to and/or found your website
- What pages they looked at on your website
- How much time they spent on your website
- What devices people visited your website from
- And much, much more!
To get started you simply need to insert some code (provided by Google) into your website. If you are not comfortable with poking around under the hood and editing HTML, it should be a very simple task for a web developer to perform (and there are also lots of plugins available for platforms like Squarespace, Wordpress, Drupal, Tumblr, etc.).
To learn more about Google Analytics read the Getting Started documentation.
The best way to find out if an idea will work is to try it. Before you go and change your business model on a hunch it is always a good idea to figure out how you can run a test with a small portion of your customers. If you sell a service, try playing around with your pricing. Does lowering your price by 10 percent increase the number of people that pay, thus increasing your overall profit? Does raising your price by 10 percent increase your overall profit? Any experiment is going to be unique to your business—and there is no magic formula. But if you’re measuring the results as you adjust the knobs, you’ll make better business decisions.
A/B testing is a methodology used to experiment and refine the message(s) on a website to help increase conversions. The basic idea is that you show half of the visitors to your website one design and the other half a different design. Along with this you define what a successful visit to the website looks like - this is usually a sign-up or a purchase. Once this test has run for a couple of weeks, or until a certain number of visitors have gone through the test, you then make the design that had the most successes the default one. Once the test has been completed you repeat the process.
Again, start simple. Run an A/B test that features different iterations of your main marketing message. Or run one that uses two different landing page images. Sometimes even using different colors on the sign-up button can tell you something. Whatever you A/B tests you try, measure, measure, measure! (Bonus tip: there are some great tools that can measure A/B testing. Check out Visual Website Optimizer or Optimizely.)
So while you and your small business may not have to deal with the jagged coasts of the Pacific Northwest, the lesson rings true: collecting data and using it to make informed decisions will help you find successful passage.
What are the key things you measure? Tell us on Facebook.