Do you find you lose track of the money coming into your business? Then tune into Finance Friday and discover the importance of keeping a close check on these 3 revenue factors and analyzing trends.
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Hey, it's Finance Friday and today I want to talk about a topic that's dear to every entrepreneur's heart. And that's sales revenue. In tracking your sales revenue, it's important to look at three factors. The first is, obviously, the money that you're taking in from customers, your revenue. The second is the discounts that you're offering customers. And the third is product returns from your customers. All three combine to tell you how your business is tracking in terms of revenue.
When looking at the money that's coming into your business, it's really important to ensure that you're looking at it on a timely basis. So if you have a bookkeeper doing your books, you should ensure that your agreement enables you to see the numbers at least on a quarterly basis. But if you're in startup mode, it would be even better to see your numbers fairly soon after your month end, in order to make sure that your startup is on track. As your business matures, you can start to look at the numbers more on a quarterly basis, as you should see more stability in the numbers that are coming in from your bookkeeper.
Start looking at discounts as part of your sales revenue trend, to see how big the discounts are, and whether perhaps you're offering too many discounts or too great a discount to entice customers to buy. If you're seeing an upward trend in discounts being offered to entice customers to buy, then perhaps it's time to look at your pricing strategy or the market conditions. Perhaps they've changed on you since you first started your pricing.
The third element of product returns is really important to understand why your customer is returning any products. If it's a supplier defect, it may be time to change suppliers. Or if it's something that is an unexpected return, for example, your customer received the product, but what you sold them wasn't what they expected to receive, then you have a mismatch in your marketing message to your customers and it's time to take a look at that.
It's important to track the trends in all three of these elements because, once you know the trend, if you see a change in one of these elements, it tells you that something is up in your business, and maybe there's a change that's required.
I'm Trudy Murphy. You can find me at trudymurphy.com. I provide business tips everyday on my blog, so come on over and leave me a comment, I'd love to hear from you.