Analyzing the Numbers: Gauging and Learning from Results
Your year-end numbers are one of the most important tools you have for steering your business. These numbers can help you identify the strongest areas of your business, as well as help you spot red flags early on. Once you know exactly what’s working and what’s not, you can fine-tune your business.
So what should you pay attention to?
==> Profits and Sales: Direction over Values
The first things you should look at are your sales and your profits. The most important things to look for aren’t the actual numbers, but the trends.
Is your business growing or shrinking? If your year over year sales are shrinking, that’s a huge red flag. It doesn’t matter if your sales are still large – if they’re shrinking that means your business could be headed for disaster.
==> Split the Business into Departments
Split your business into different departments or product categories. Are there categories which are exceptionally profitable? You might want to focus on expanding those. Are there categories that are underperforming or losing money? You might consider cutting those.
Look at your departments not just in terms of sheer sales, but in growth as well as return on capital numbers.
==> Analyze Your Advertising Avenues
Where did you spend advertising money last year? And what kind of ROI did you experience? Having good tracking in your marketing will make this question a lot easier to answer.
Make sure you don’t just track dollars spent, but also manpower. For example, social media advertising doesn’t cost much money at all, but it does cost a lot of manpower. That’s real money on employee costs that you have to factor in.
==> Return on Networking Time
What amount of time do you spend on networking? What was the return on that time investment?
Business owners often underestimate how important networking is for them. When you really look at it objectively, networking could have a big impact on your business.
==> Continuing Education
How much did you invest in continuing education? How much is not investing in continuing education costing your company? What’s the return on the money you did spend on continuing education?
Training your employees in new skills, new technologies and new tactics can seem expensive at first. But often times not training them is far more costly.
==> Customer Satisfaction Statistics
Finally, look for numbers that can give you a gauge on your customers’ satisfaction.
Are your return percentages up or down? Is the ratio of new to repeat customers increasing or decreasing? Is the average number of purchases per year per person going up or down?
Most businesses rely heavily on repeat customers to succeed. Look at these numbers to get a sense for whether people like you enough to buy from you repeatedly.
These are some of the most important numbers to look at when analyzing your business. As time progresses, you’ll start to get a better sense for what the most important numbers to track in your business are.