When you ask the CEO of a start-up how business is doing, he or she usually answers "very well" and tries to support this claim by some metrics of success. However, the problem is that most new entrepreneurs do not actually know how to measure their success. An interesting article on this topic was recently published on Inc.com. It was written by Marc Barros, co-founder of the Contour company, which focuses on producing and selling cameras. He started this business shortly after graduating from university in 2004 and managed to turn a garage company into a multimillion dollar business. Today, the company's products are sold in 40 countries.
Barros admits committing the same mistakes when he measured the success and sustainability of his own business using non-relevant metrics. Thus he summarised five metrics which have no direct correlation with the success of start-up companies.
1. The amount of raised capital
Having a lot of money at the beginning is always good, especially when noticed by the media. However, this does not mean that you have a successful business. It only indicates that someone thinks that they can make money on you.
2. Number of employees
In business, there is no direct correlation between the number of employees and the success of a company. The fact that you have a large number of employees may actually mean that you cannot effectively manage your projects.
3. Number of users
Many start-ups have a flying start, but then comes the sobering up. Success is shown only by the number of your customers, their satisfaction and how often they use your products.
4. Expansion abroad
Establishing a foreign branch is easy; succeeding in a foreign market is not. It is not important how many countries you operate in if you are not among the leaders.
5. Number of stores
The reality is that the more stores you have, the greater the risk that you will not be able to sell your inventory. A low volume of sales in one store cannot be solved by opening another one.
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