If cash flow is the lifeblood of a business, understanding sales trends is the heart. Every business owner needs to understand their value, especially in the volatile holiday season, when retailers make 30% or more of their yearly sales.
Sales trends, or patterns, help identify opportunities and issues. When done successfully, they inform decisions around marketing allocations, pricing, product needs, development, evolution and development.
Determine growth or loss against the same time period year-over-year
Tracking monthly and year-to-date sales vs. budgets and forecasts is a key discipline for business success. Unless you’re tracking sales and measuring against what you have done or have budgeted to do, it’s impossible to determine if your business is succeeding.
Define sales targets
As with all tracking, you need to start with defined sales goals that are in line with your business objectives. Look at the bottom line, but take careful note of how sales results were achieved. For example, do you only sell a certain product successfully below a certain price? This information becomes essential to your pricing strategy, which feeds into successful sales.
Track profit margins
You also need to look closely at your profit margins – are they realistic for both you and your customers? Tracking sales against previous years and months enables you to identify trends. This is easy to do with a good reporting tool. Perhaps your sales have grown because you’ve gained a valuable new client or introduced a popular new product line. Whatever the reason, understanding it lets you capitalize on the opportunity it presents. If the new client is in an industry you don’t usually serve, you can now market your offering to other prospects in that industry. If the new product line is that popular, does it make older lines less viable?
On the other hand, your sales might have shrunk because you lost a good salesperson or because you put your prices up. As long as you understand why—you can fix the problem. Do you need to hire a different caliber of salesperson or do you need a better staff retention program? What informs your pricing?
Sales trends give you a wealth of valuable information if you can see it and use it to your advantage.