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It can be difficult to define "success," as every business will grow differently. Setting and tracking reasonable goals lets you define your company's success for yourself. — Getty Images/10'000 Hours

Business success can look different as your company grows and matures. For a startup, success is getting your first sale. Opening a new location can be a metric for success for a company that’s been around for three years or more. How you quantify business success changes over time; these methods can help determine whether you’re on track or need to adjust.

Set a SMART goal

Determine what success looks like using a SMART goal: one that is Specific, Measurable, Achievable, Relevant, and Time-Bound. Success looks different depending on your growth stage, industry, and financing obligations. For instance, a startup may simply try to break even by Year Two, while hitting break-even point as an established business could be a sign something is off.

Here are some examples of SMART goals that can help quantify success at your business:

  • Increase monthly recurring revenue by 15% within the next year.
  • Acquire 100 new paying customers within the next six months.
  • Increase brand awareness by 10% as measured by social media engagement and website traffic in the next nine months.
  • Increase employee satisfaction by 10% as measured by an employee satisfaction survey in the next 12 months.

As you set your goals, use industry benchmarks as well as any historical data you have from your business to ensure you’re establishing a reasonable baseline. Keep in mind customer trends that could impact your business over the time period you’ve chosen — such as seasonal peaks or lulls.

Translate your goal into key performance metrics

Many metrics can help you stay on track to meet your goals, and it’s important to track those that are most relevant to your business. These metrics are closely correlated with business success and can be applied broadly no matter what SMART goal you’ve set.

  1. Break-even point: The point where your business neither makes a profit nor a loss, or when revenue coming in is equal to your costs.
  2. Profit margin: A metric that reflects the percentage of each revenue dollar retained as profit after paying your production costs. The higher your profit margin, the better.
  3. Leads, conversions, and bounce rate: These marketing metrics tell you how well your campaigns are performing.
  4. Employee retention: See if you have a problem retaining great talent — your employee metrics can often impact your customer metrics.
  5. Customer retention: This metric should be standard for all business owners. Data shows that increasing customer retention rates by 5% can increase profits by 25% to 95%; and, acquiring a new customer can cost anywhere from five to 25 times more than keeping an existing one.

These are the standard KPIs that can help you understand whether your business is successful. You should also select metrics to track that are directly relevant to your SMART business goal.

[Read more: Small Business KPIs: What Are the Numbers That Matter?]

Success looks different depending on your growth stage, industry, and financing obligations.

Track your KPIs from month to month

Many entrepreneurs go through the process of setting targets, only to forget about them until year-end. You are far more likely to reach your goal if you regularly monitor your metrics.

“Small business owners often struggle to track their company’s key performance indicators (KPIs) due to the busy schedule that comes with day-to-day operations and a lack of technical proficiency,” wrote Business.com. “But companies that do monitor KPIs are almost twice as likely to hit growth targets.”

Keep tabs on your business by reviewing your financial statements, asking for regular customer and employee feedback, and using analytics tools and software. Review your profit and loss statement, balance sheet, and cash flow statement quarterly to see how your business performed. Gather customer feedback via your email campaigns or tools like Clover Feedback, and keep tabs on your KPIs using tools like Google Analytics, Tableau, Scoro, or Geckoboard.

Ultimately, profitability is just one way to measure business success. It’s one of the most important metrics, but it’s not the only way to see how you’re performing. Revisit your SMART goal regularly to make sure it still reflects your mission and values and to ensure that the metrics you’re tracking give you the complete picture of your business’s health.

[Read more: 6 Signs Your Company Is Ready to Expand]

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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