subject: How to improve your business using your existing financial information [print this page] How to improve your business using your existing financial information
Every business is looking at how to improve their bottom line, whether is by reducing costs or increasing sales improvements can normally be made just by looking at what you currently do.
One of the first places to look for information is in your accounting software package. If your business use an accounting software package to track your sales and expenses and banking that means that you have a wealth of information to work with to see how you can improve your bottom line.
This information will give you an accurate history of how you have been performing and off those previous trends you can get a better idea of what your main sales are and what can be done to improve them. We will discuss some basic things to look at to see how you can start to improve your business.
Who are your top five customers in sales?
Some businesses will have a smaller number of customers that they deal with for most of their turnover. Do you know which customers they are? It could be the case that you will have customers that you will do a lot of work for but actually they may not get you much in the way of revenue. These customers may be a lot of work and not much generate much revenue. This means that they are not as profitable due to the amount of labour involved.
Who are your top five customers with regards to margin?
Businesses sell a range of products or services and they will have different price structures, this means that some of these will have a better margin meaning that the cost for you to sell it is a lot less compared to the price you sell it for.
Looking at these two things could lead to insights that you may not have noticed about your business. Do you have customers that you spend a lot of time with but they do not purchase as much as other clients? This means that maybe you should spend some more time focussing on some of the other clients to see if you can improve their sales. If you have customers that buy a large amount without much encouragement from you could you increase the amount they buy by spending some extra time on them?
With looking at the margin of customers there may be some services that you offer that may give you a very low return. Are there other services or products that you could offer them that offer you a higher return? Are your prices a lot lower than other businesses and should they be increased to match what the market rate is?
These two aspects of who your top customers are and which ones have the best margin are very important tools for your business. They will offer insights into how your business is actually performing and who your most important customers actually are.
