IN THE JUNE AND JULY ISSUES, we covered the most important numbers you should be monitoring daily and weekly with your business. As valuable as those are, some figures require a longer-term view in order to see how your business is trending and in which areas you need to concentrate your efforts.
Monthly numbers tend not to lie, so this is where you should spend the biggest part of your business analysis.
Here are five of the most important number-crunching exercises you should be doing on a monthly basis.
1 Comparing monthly versus weekly trends. Your daily and weekly analysis will have given you a heads-up on areas of performance. You now need to compare it to the monthly performance. Did your trend in week two translate into a continuation overall? If your weekly trend is becoming a monthly one, you need to review the action you have taken or put a strategy in place to address it if one doesn’t exist yet.
2 Financial reports/budget. Monthly financial reporting used to be an onerous and expensive task for businesses. With modern computing power and a large selection of online accounting software available, it’s now easy to determine your monthly store profitability. Once your month has ended, you need to compare your actual performance to budgeted projections. How did your expenses measure up, particularly as a percentage of sales? What was cash flow like?
3 Stock imbalance. Inventory can easily get out of alignment without you even realizing it. A stock imbalance report will allow you to see the price points where sales are happening and whether you have sufficient product in that price point to meet demand.
4 Salesperson performance. Your sales staff are the key to your sales performance. This is the time to review their efforts against targets and also to assess who provides the best return on sales for dollars spent in wages and hours they have worked.
5 Conversion rate. Are your browsers being turned into buyers? Your conversion rate data is one of your most important metrics. This is also a good measure of marketing spend as you can review foot traffic against your marketing investment to determine a cost per visitor achieved.
If your month has become a little busy and you haven’t spent the time on the daily and weekly performance measures you would like, then make sure you don’t neglect the monthly exercise of reviewing your key performance metrics. An hour a month spent in this area can be one of the most valuable uses of your time.
David Brown is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports, contact inquiries@edgeretailacademy.com or phone toll free (877) 569-8657.