Growing Your Sales and Profitablility Through a Review of the Numbers

Bob Babcock Guest Contribution Leave a Comment

I work with many small businesses and for many of them their bookkeeping is not a priority but it should be. Did you know that a quick review of your businesses financial results can help you focus in on those areas which will result in increased sales and profitability? No need to create anything fancy you can easily track some of these metrics in an Excel spreadsheet. Below are just a few metrics that you can review but there are many more that you can track depending on the type of business and your ultimate goals.

Metric 1: Sales by Item or Income Type

In your Excel spreadsheet keep track of sales by item and by income type. Do a comparison to the prior month, prior quarter and prior year to see what the trends are. Review these results for seasonal fluctuations and items/income types with the most volatility.

Metric 2: Sales by Source

When setting up customers also add a customer type that equates to the referral source. Run reports to determine which referral sources are generating the highest sales.

Metric 3: Profitability by Business Segment

If you are using QuickBooks at a minimum use Classes or perhaps even use Items on your expenditures. This will allow you to create reports in QuickBooks so you can see which segments of your business are generating the most net revenue.

Metric 4: Days Sales Outstanding

If you have receivables in your business keep a close eye on this metric (Sales Income divided by Accounts Receivable). If this balance is growing you might want to reconsider whom you accept as a customer to minimize your bad debt write-offs from non-paying customers.

These are only a few of many metrics you might want to consider tracking. However, in order for these to be valuable you need to regularly update your books, reconcile your accounts and review your financial statements for accuracy. If you are spending way too much time doing data entry you should check out our Transaction Pro Importer for QuickBooks.


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