How are your sales? That’s the question that everyone in the business world wants to know! In the non-profit world, you might replace the word “sales” with “donations”, or “event revenues”, or even “memberships”, but the same basic concept applies. You need to track cash flow trends within any organization to determine growth, the effectiveness of your programming (or merchandising) and the impact your marketing campaigns have on your target population. However, simply collecting “sales” data may give you an incomplete or misleading impression of your organizational growth. Yes, you need to record daily sales reports, but what other data gives your business a more holistic view? Below are a simple list of categories you might want to record that give you the ability to track sales trends within your organization.
1. Sales – Obviously, you can’t track your sales per day, week or month if you don’t know what your sales are. Modern Point of Sales systems make this process easier, but you still need to determine the relevant time frames you need to accurately record meaningful data. Daily, weekly, monthly, quarterly and yearly subtotals are suggested, but you may have a specific “season” within your business that is worth tracking independently.
2. Items per Sale –
A general retail rule of thumb is that selling a single item to a consumer equals a
net loss, two items is a break even and three or more items sold during a single transaction equals profitability. While this isn’t always true, a higher volume of sales per consumer generally results in greater profit potential for a business. Tracking items sold per transaction is also a great way to track the effectiveness of your sales staff and overall merchandising.
3. Foot Traffic – How many people stopped into your business on a given day? What time of day did they stop in? How many “visitors” were converted to “spenders”? This measurement can let you infer the quality of your marketing, your location, the consumers opinion of your products/services and the quality of your sales staff.
4. Day of the Week – Many businesses see a big fluctuation between sales on a Tuesday and sales on a Saturday. By simply looking at the calendar date when tracking inflows, you may see negative daily patterns simply because you have a lack of context. While this generally balances out over longer time periods, matching “like” days can give you an instant snapshot of sales growth or decline. Looking at dates that fluctuate days (like Christmas) can help you determine how to run specials or traffic expectations on certain days. For example, if Christmas falls on a Saturday, you may have fewer people leaving town to shop, and more people in your store. If Christmas falls on a Monday, you may have more people leaving town which could result in lower in-town sales.
5. Weather –
A heatwave in the winter may damage coffee sales. Torrential rain could deter general
shopping. A “snow day” could eliminate shopping all together. Simply noting the basic weather could provide insight into the ups and downs of your day-to-day cash flow. Watching the forecast after you have a basic understanding of how weather impacts your sales could help you predict future staffing needs and sales.
6. Advertisements or Marketing Programs – People want to know if their advertising expenditures or marketing plans have a tangible impact on sales. You can’t know their impact for certain if you don’t track the programs relative to your sales data. The data points won’t match up perfectly, and you need to have generalized ads that keep you in the consumer’s mind without selling a specific item or highlighting a limited time “sale”, but you should see a generalized sales bump if your marketing efforts are effective.
7. Events in Town – How does an influx of people to town for a certain activity impact your business? If you record events as they happen (block parties, the Dirty Kanza, Shop Hops, Midnight Madness, Parades, etc.) you can infer staffing needs immediately. You can also use data to justify sponsorships or other types of support to events that actually benefit your business. You probably won’t know about every event in town, but keeping record of the impact your business receives during yearly “standard” events can help you plan to maximize sales.
8. Net Profitability –
You are here to make a profit, or at least stay neutral (for non-profits). If you conduct events that look great but put you into the red, that event may not be sustainable. If you gross a high sales figure at low margins, you may have an issue with your merchandise selection. Using your Point of Sale system (that can generally integrate with your accounting software) to determine the daily net can give you a better idea of how your business is actually doing.
9. Outliers /Overview – If something weird or out of the ordinary happens that impacts your business positively or negatively, you may want to record it. An individual just passing through stopping in and buying $1,000 worth of items may be worth recording as an outlier. A busted water main or an electrical outage that prevents your business from operating may also constitute an outlier. Recording events outside of the norm may help you understand your sales patterns better and justify internal fluctuations.
Your daily reports should be a regular part of your end of day procedures. Store reports in a format that allows you to combine and interpret the data in a usable format. Over time, you should see patterns emerge that allow you to make better business decisions and reverse negative trending. A lot of entrepreneurial business is about the unquantifiable “feel”, but going “with your gut” should still have tangible and measurable outcomes. A few extra minutes spent per day, could help you save (or make) money over time.
See this article and MUCH more in this week’s Emporia Main Street E-newsletter!