Every business owner needs reliable figures to regularly check on business performance.
A valuable set of measurement data to collect is your annual customer numbers, average sales, number of customer visits and so on. Using these figures as a baseline you can then set realistic targets towards increasing profitability and continue to monitor the business' performance on say, a monthly basis.
In a retail store, for example, (although the exercise is appropriate for other businesses also), you need to collect the following data from the previous year:
- Number of customers = x
- Average sale per customer = y
- Average number of transactions per customer = z.
By multiplying the figures, x * y * z, you can calculate the business' annual turnover. Ensure this figure equals the total sales for the year.
The next step is to use these figures to set specific targets for the following year and record this data in your business plan, for example:
- Number of customers last year – plus targeted percentage increase
- Average sale per customer last year – plus targeted percentage increase
- Number of transactions with customers last year – plus targeted increase.
At Paul Martin Chartered Accountant Limited we can help you to set and monitor your business measures - contact us for assistance.