Solo Metrics: 7 Ways to Benchmark Your Business

by Terri Lonier, founder of WorkingSolo.com

How do you measure your solo business success? Where does your company stand, and where would you like to improve? For soloists, it’s often about more than financial gains. Consider these seven ways to chart your business success.

1. Gross sales
Most companies rely on a single number to assess success: gross revenue from sales of products or services. But this figure can be misleading, particularly if you have high overhead or other expenses that can distort this snapshot of overall business activities. Calculating your gross revenue over a specific time period is a good place to start, but don’t rely on it as your only yardstick.

2. Profits
Imagine two very different businesses. One is a solo business with low overhead and high profit margins. The other is a much larger business with higher sales volume but with an overhead and other expenses that eat up much of the profits. Both companies end up with the same net profit. Which is the more appealing business? I argue that it’s the lean and nimble solo firm, one that drives profits while steering clear of the complexities that so often drain the management of a larger enterprise. Remember, at the end of the day, it’s net profits -- not gross dollars -- that really matter.

3. Growth
If your goal is to expand your company, then keep an eye on your growth percentage from quarter-to-quarter or year-to-year. Picking up an additional $25,000 in revenue in a $250,000 company may not seem like much until you convert it into a percentage and recognize it for the 10% growth that it is. Conversely, setbacks or stagnations in your company can be placed in a broader perspective by considering them in percentage terms and comparing them to industry trends or averages.

4. Number of clients or offerings
There’s safety and stability in diversifying your revenue. If the majority of your business income depends on a handful of clients or offerings, you run the risk of large cash-flow swings and other financial strains. Expanding your client base or sources of business revenue can be an important strategy for success, and charting your revenue sources is a meaningful way to measure your progress as you start to diversify.

5. Size of your team
Not every solo business longs to become a larger company or to hire employees. Yet just as a sports team is often valued by the depth of its bench, so too must a solo business be aware of the talent reserve it can call upon when needed. These may be employees, virtual partners, affiliates, lawyers and accountants, or other business colleagues who can advise or assist you. How strong is the network that keeps your solo business running smoothly?

6. New capabilities
To remain competitive, companies of all sizes must constantly assess the marketplace and refine their focus. This often requires adding new capabilities to enhance the value a company can bring to its customers. When was the last time you upgraded your professional capabilities through new skills, processes, or technologies?

7. Time off
Most soloists enjoy their work and readily trade the regimen of traditional vacation days for the flexibility of designing a daily routine tailored to individual needs. Scheduling free time is an important element of success, however, since it enables you to replenish your energy and creative spirit. Measuring the amount of time you are able to be away from your business can be a valuable guide to building long-term business success, since you will be protecting your company’s most important asset: you.

As these seven benchmarks reveal, there are many ways to track your business progress. The three most meaningful measurements points might be: 1) The “now,” or your baseline; 2) The ideal or possible, your target; and 3) The milestones, or your progress along the path from the “now” to the ideal. Crafting your own set of measurements and monitoring them on a regular basis can keep you focused, inspired and on track to solo success.

Copyright 2007 Terri Lonier. All rights reserved.
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