Autumn Health Check: are your sales growing?
The trees are turning, fruit is being harvested, and it’s time to check in with your business - what fruit has it been bearing?
Autumn is a great time of year for small business owners to take a look at how their businesses are performing. Even if you're gearing up for the busy Christmas period, now’s the time to review your business’s health, and identify areas you might want to address. The first key figure to check is whether your sales are growing.
How can you tell if your sales have increased?
To check if your sales are growing, look at your monthly profit and loss account for last year and this year. The number you’re interested in is the total sales, or turnover, for each month in turn.
You might find this easier to do if you plot a graph of your monthly sales, using a simple spreadsheet. Plot the amount of sales revenue on the y axis and months on the x axis. Look at the trend over time - the line on the graph should be going up and to the right!
You could also plot a graph to show this year’s sales against last year’s sales - use the same axes but this time have bars for last year under this year’s line graph. If your business’s sales are growing, the line would be above the bars.
If your sales increased - where did it come from?
If your sales have grown, that’s great! Do you know exactly why that is, so that you can possibly take even more advantage of it? Here are some things to consider:
- Has a new market of people started buying your product or service - for example, people from a new location?
- Did you do more advertising or networking this year that’s been paying off?
- Have you been improving your online or physical shop, so that you’re getting noticed more?
Once you have a good idea of why your sales have increased, you can hopefully turn this success into a formula that will serve you well into the rest of the year and 2014!
If you didn’t grow - why was that?
If your sales trend graph is flat or slanting down and to the right, take this opportunity to dive into the numbers and find out why. Here are some things to investigate:
- Did you lose a major customer, or market of customers? For example, if you normally see a lot of overseas business, has that changed recently?
- If you look at your sales by product or service, did you find that one particular product or service just didn’t sell so well this year? Is it going out of fashion, or have trends changed in your industry?
- Has a competitor taken over a virtual or physical spot that you used to own? For example, if you do business online, are they advertising on the same keywords that you are?
How could you grow your sales?
You may not want to grow your business, or grow it too fast. But if you do want to grow your business, check out these examples of how three businesses grew their sales, including expanding into new markets, new countries, and increasing their product line.
But even if you’re happy with where you are, don’t push growth out of your mind completely. It’s worth having a growth plan in mind to be prepared for the future - after all, you never know what the next season will bring!
Sales revenue isn't the whole picture, of course - profit is also very important! In our next Autumn Health Check article, we'll look at how to check on your business's profitability.
- How MTD will work for businesses with an accounting year that doesn't match the tax year
- Important news for contractors - changes to IR35
- New tax year: what has changed?
- New VAT flat rate scheme rate for certain businesses
- Why the first week of April is the best time to switch to a new accounting system