How Bookkeeping Can Help You Grow Your Sales and Decrease Your Costs
We are constantly amazed by how many business owners are not using the most important source of information about their business - their financial system. In fact some business owners only update their financial system monthly or when their BAS or GST return is due. If this is you then you are missing out on a great source of valuable information about your business that could help you increase your sales and decrease your costs.
If You Don't Measure It, You Can't Manage It
Smart business owners are intimately familiar with the "numbers" of their business. What are the Key Performance Indicators or KPI's that drive your business? If you don't know these or don't look at them at least weekly then you are missing out on a potentially huge opportunity to understand where your business isn't performing and make improvements.
Simple things like who are your best customers and which customers do you actually make money from? The answer to the first question may not necessarily be the same answer to the second question. By using the basic reports in your MYOB or QuickBooks you will be able to quickly understand what products you are selling to what customers and how much gross margin you are making on those sales. However, for these reports to be meaningful and accurate you need to ensure your bookkeeping is up to date.
Look at Your Reports Daily
Big businesses look at reports daily. They use KPI and simple reporting tools sometimes called dashboards. Like a dashboard on a car they quickly tell you what you need to know about where your business is going and how it is travelling. You don't need to look at every single transaction every day, just look at simple summarised dashboards you can implement quickly in your business even from MYOB or QuickBooks. They will make understanding your business a lot easier. Again the key is your bookkeeping. If your bookkeeping is kept up to date you can use these reports when and where you need to without worrying about if they are accurate.
Analyse Your Sales to Increase Your Sales
In most businesses the 80/20 rule applies. That is, 80 percent of your sales come from 20 percent of your customers. Who are the customers who make up that 20% in your business? Do you know who they are and what they buy? Can you look after them better? There are three basic ways to increase sales in your current business. Sell more to existing customers, sell new products to existing customers and sell new products to new customers. In order of cost and effort required that is the order you should approach them - existing prducts to existing customers first. Analyse what works and how you sell to your good customers and use this information to sell more to these customers.
Decrease Your Costs
Your system can quickly show you where and when you are spending too much money. You can compare month by month and also compare against industry benchmarks widely available free on the internet to see where you are overspending compared to competitors in your industry. Analyse where you are spending money by reviewing your expenses by function in your business. Simple systems such as MYOB and QuickBooks can be easily configured to give you this type of detailed analysis.
Make the Change Now!
It is bad business practise to wait until after quarter end or year end. For your reports to be meaningful and accurate you need to ensure your bookkeeping is up to date. Once you have your bookkeeping updated your system makes it easy to look at your reporting weekly, if not daily. Once you have made these changes and improvements you won't look back. Growing and improving your business will become a fun and exciting task.
Avegna assists businesses such as yours to implement and use these simple and effective tools to improve your business. For a free no obligation discussion about how we can assist your business please call us free on 1300 797 535 from Australia only.
Scott Lyall
CEO of Avegna
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