The following is a guest post by Ricky Peterson.
Starting and running a small business is a really popular thing to do right now, and the internet has made doing so easier than ever before, but running and growing a business successfully requires a lot of hard work and dedication.
Tracking and recording all of the things that keep your business alive is the vital first step to building a strong business and if you can do so consistently you will instantly give yourself an edge over the competition.
The following are 5 suggestions for things that you should consider tracking and a quick example of how to track and why it matters. Obviously different businesses have different needs and you can probably go a lot further, but as a bare minimum, tracking these basic stats is better than not tracking anything at all.
This goes without saying of course and if your sales drop you will probably notice immediately. I would recommend that you track sales separately for every sales channel you have (eg; shop, website, eBay…)
Ideally you want all of these numbers to gradually increase, but tracking will also alert you to areas where you could improve and also make you more aware of which aspects of your business provide the biggest income.
Most businesses advertise or market in some way and being on top of your costs is vital. Again, track everything separately and compare these figures to your sales levels. If your advertising costs start to rise but your sales don’t then you may have a problem.
Any effort you put in to free advertising should be counted as best you can. So if you spend 5 hours in forums trying to build your profile then factor in the cost of your time.
Ideally you should go much more in depth than this, but if as a minimum you track your daily, weekly or monthly spend across all of your channels you will at least be more aware of how your business is working and you will often be able to spot problems before they happen.
Cost Of Fulfilment
This is one of those costs that will sneakily rise as you grow your business. New costs find ways of getting in and things will become less efficient as you start doing higher volumes, especially where members of staff are involved.
I would recommend each month doing a thought exercise; Write down all of your costs and work out what it should cost to fulfil one order (or say; 10 hours of service). You should then be able to multiply that by the number of orders that month to work out what your total costs should have been…
If your actual costs are much higher (or lower) than expected, figure out why and make sure that your profit margins haven’t slipped.
This one is for web based businesses primarily and could be the most important metric of all. Your conversion rate is simply the percentage of visitors who become customers. Needless to say, increasing this means more sales.
I could write a whole series of articles on this subject alone, but as a bare minimum you should have tracking set up (Google analytics) on your website and you should track conversion rate from a few of your key pages/categories and for your main traffic sources.
This should all be pretty automatic once set up, so make sure you check the numbers each month and any big changes make sure you figure what has changed. Also, if your website is altered you should monitor your conversion rates to see what effect those alterations have.
As a minimum you want your conversion rates to stay the same; better still, if you can increase your conversion rate you will make more sales without having to increase your advertising spend!
Most businesses these days are international, whether you realise it or not. For this reason you should also be monitoring your key exchange rates so that you can predict changes before they happen.
If you sell overseas then obviously monitor the currencies of your main customer groups. If you buy from abroad or if your suppliers use materials that originate from overseas then monitor those currencies.
By doing this you can predict your costs increasing and make plans accordingly and if a currency movement makes your products more expensive to your international customers you can also prepare for that.Thanks for reading my post, my name is Ricky and I write for Currencyconverter.co.uk. Click here to visit our website and find out more.