How do you know if your business is doing well?

An important question that every business owner should ask themselves is ‘how do I know if my business is doing well?’ It can be a lot more complicated than you expect. The answer, however, can be narrowed down to some general terms: profitability and cash flow. Many would also describe this as growth, which would include the following few steps: having a revenue stream, having an expense budget and a usable profit margin. Although growth is important, it isn’t the end all be all of a successful business. Ultimately, doing “well” means generating profit from revenue and having the cash flow to keep the business running.

Growth can be described as a state of doing well, but what about starting up? Is that not also a state of doing well? Although the answer is yes, there are many steps and elements involved with starting a new business. Without even opening for business yet, an owner must come up with an idea or concept.

Typically this leads to research – research on industry dynamics in their area or trade research on their specific product or service offering. Business owners want to know where their competition is and how they are performing. This information can give the new business owner an idea of where they will fit into the market and how crowd dynamics will affect their product or service offering. This is also the prime time for evaluating and creating a solid business plan to share with investors, partners or even bank financing departments.

Use data to inform strategic decision-making

Successful business plans are founded upon reliable data. Data helps an owner make decisions that will shape the future of their business. A business owner can use data to help them make strategic decisions or decisions that will measurably affect their business. If a product offering is not generating revenue or is not profitable to produce, should it be made? Or maybe a service is not having the desired effect on customers or clients. It could be a trend or market dynamic is taking away from the value proposition of a service and changing consumer behaviour – which would mean changing how you address potential customers’ needs. 

How can you equip yourself so you can make good business decisions? 

It all starts with data. Reviewing data allows you to find out what’s going on in your industry and how it’s changing. The next step is understanding the data and how it can be used to make decisions that will affect your business. A masters in business analytics is a good starting point on learning how to get actionable information from data.

At the end of a business year, analysis can be done to determine what worked and what didn’t. As the information is reviewed, the owner can make the necessary adjustments that will help them succeed in the future. For example, if they have not been able to generate a profit on a product offering, they might look into ways of increasing their pricing or trimming expenses to increase margins.

Revenue generation is arguably one of the most important pieces when it comes to your business doing well. However, it is not just about creating new revenue streams within your business. You also need to consider expenses that you are incurring for every stream for it to be profitable or potentially turn into new revenue streams. It is important to keep track of how much revenue is coming into the business and where it is going. If there are factors that are causing expenses to stay high, it could be a sign that something needs to change. This may lead you to make some hard decisions on potential product offerings or services that may be losing money for every sale you make.

Lastly, cash flow. Cash flow can make or break a business – especially with unforeseen situations that come along in your business life cycle. An example would be the loss of a major client or the introduction of significant competition into the marketplace.

Other signs that your business is doing well

So far we have covered fairly broad theoretical concepts on a successful business. There are other real-world indicators of a successful business:

  • You are constantly recruiting for newly created roles.

As your business grows your company headcount will need to increase. A good sign of a successful business is the need to recruit for newly created roles. This mustn’t be confused with a high staff turnover due to dissatisfaction. 

  • You are excited about new opportunities that the day may bring.

The more excited you are about the opportunities that come your way, the better. This can be in the form of new ideas and potential partnerships you may bring on. 

  • Everyone is happy to work for you.

A good sign of your company doing well would be when there is a generally positive vibe in the office – both from your staff and new hires. 

  • You are finding it hard to keep up with demand!

If you find yourself turning away customers because you don’t have the capacity, this could be a good indication that your offering is highly desirable.

  • Your reputation precedes you.

It’s not always bad news that travels fast. If you find that people know about you or your business before you have even met, it can be a sign that your business is successful. A reputation spread by word-of-mouth is the best type of advertising.


You can learn a lot about how your business is performing by monitoring various data points across your business. However, it is important to remember that there is a lot of noise out there and that you should not base your business decisions solely on data. This quite often gives the impression that one must know everything about every aspect of their company to lead it. This is not the case as it can be quite overwhelming to have so much knowledge on all parts of your business.

Sanjit Dhabekar

Sanjit Dhabekar is a passionate Digital Marketer and Blogger. He loves to explore new opportunities to rank websites and earn money online.

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