Analysing Your Sales Figures
Do you even do it?
Do you analyse your sales figures? Dare I say that most people don’t. If the money is in the bank, then does it really matter how it got there? This is the attitude of most business owners, and this is a very short-sighted attitude to have. What if the money doesn’t arrive one month? What if the sales slowly start dropping? Even if we don’t look at the negative, but just ask how you know that there couldn’t be more money in the bank. Regardless of how you look at it, it is a good idea to know how the money is being made. Why? I’ll explain.
Reasons to monitor your sales
There are many reasons to monitor sales, after all, isn’t that why we are in business in the first place? Why would you not want to know specifics? Here are a few reasons why it is important to monitor your sales:
1. Product Validation – If you sell various products, which ones are selling? Which ones are more lucrative? Which ones are more hassle than what they are worth? These are all decisions that you need to make, but how can you do that without knowing what is being sold?
2. Sales Trends – Are the times when your sales vary, even that of a specific product? If you always sell more ice-cream in the summer, then you need to produce more ice-cream in preparation for the summer, and then lower production thereafter. You may not think that this applies to your business, but you may be surprised. Information is key when it comes to preparation.
3. Leads and Sources – I use a spreadsheet to monitor where my sales come from (as best as I can establish). Where do your sales come from… LinkedIn, referrals, your website? They could come from anywhere, and unless you know which avenues are working, how do you know what needs to be improved, used more often, or even dropped completely? This is a regular issue that I address using spreadsheets, as many people spend valuable time and money with their marketing, and they really need to know which streams are working.
4. Pipeline Management & Sales Projection– I have written a blog post all about that, so take a look at that.
5. Identify Opportunities – Isn’t that what it is all about? Understanding what is happening, so that you know what changes to make. Having a look at how many calls you have made, how many quotes those calls have led to, and how many of those quotes have led to sales, will show you how many more people you need to contact in order to make your target. Maybe you just need to work on converting more of the quotes. If you categorise your jobs, you can see which jobs are more successful, in order to concentrate on those. I recently did a job for a client who monitored the types of the businesses that he tendered for, and what his conversion rate was for each. That way, if he had a really low rate for a particular type of business, and a high rate for another, guess which one he will now target more often. Information is key!
How do spreadsheets help?
There are many times when people don’t associate spreadsheets with what they need done. I often have an uphill battle trying to show people what can be achieved with spreadsheets. This is not one of those times. Analysing data, and then using that data to calculate useful information, is what spreadsheets were made to do. When someone says “financial analysis” to you, surely the word “spreadsheet” comes to mind. I have created many spreadsheets to analyse all sorts of financial data, but one of my favourites is analysing sales data. Why? Because it can produce so much useful information. The 5 points that I have stated above are the most popular, but people come with all sorts of requests, as all businesses are different. What would you like to know? We live in such a data-rich time, but we are often so information-poor. What information do you need from your sales data? Maybe it is time for you to benefit from the power of a good spreadsheet and, fortunately for you, you now know a guy who can do it for you.