Last week we overviewed the importance of reviewing your business and making achievable plans for the upcoming year. To plan your year we suggested 5 key questions:
- What did we learn from last year?
- What are our customers wanting from our business?
- Is our brand relevant?
- What are our competitors doing better than us?
- What do we want to achieve this year?
But where do you start? This week we will work through question 1, and provide an overview to assist with your review to enable you to assess the metrics, technology, processes and platforms you are using to manage your business, and assess what changes may need to be made to create growth.
So what did your business learn from the previous year?
As a small to medium business you are unlikely to have access to the technology of your larger competitors, but regardless of technology constraints it's important to monitor your key performance indicators (KPI).
We provide our clients with a KPI template which is easy to operate and which provides an easy to use platform to input and monitor metrics which are important to understanding your business.
But back to the review, what we look at:
- Sales Performance
- Customer Loyalty and Retention and Acquisition
- Operating Productivity
- Gross margin
- Team Reviews
Sales is simply defined as income from customer purchases of goods and services, minus the cost associated with things like returned or undeliverable merchandise. Of course, everyone is happy when the numbers keep going up, but the data needs to be mined constantly for deeper meanings and trends.
"Past performance is the best predictor of future performance."
Reviewing sales performance allows you and your team to identify weaknesses in your sales strategy and make changes so that you can improve the results over the next period. You can also use the data to set realistic sales performance goals for your business.
So what should you be analysing, separated by channel and if you have more than one store, by store:
- Gross Sales
- Net Sales
- Average basket size
- Average transaction spend
- Sales by category (and/or sales per square metre)
- Seasonal trends
- Comparison to historical performance
- Comparison to budget
Remember sales is only one part of the jigsaw of the annual review, next week we will delve further into Customer behaviour, but in the meantime we would love your feedback on the outcome of your sales performance review.