Omaha, NE—Last month, we discussed focusing on the key measures of your business. This article will help you to create a roadmap so that you can measure your progress towards your sales and profit goals. It is important to achieve your future wealth and retirement goals.
Monthly Sales Analysis. Following our example of ‘GAP’ Sales of $1,062,265, we now need to break the annual budget down into realistic monthly targets. Because not all months are created equally, we need to divide the annual budget into relevant ‘seasonal’ proportions. For example, December sales for most stores represents between 20-22% of total annual sales whereas other months can be as low as 5%. We suggest you look over at least three (3) years' sales history trends to help even out any exceptional highs or lows. See Table 1 below:
In this table, you will notice that for the month of June (highlighted), sales have ranged from 6.5% in 2016 to 8% in 2018 with the average being 7.23%. Therefore, if the average June contributes 7.23% of total sales then your budget for next June would be $76,802 i.e. 7.23% of $1,062,265 equals $76,802.
If you do not have history going back this far, then either go back as far as you can and draw your own conclusions or use the Industry averages. Please take into account any months with unusual trading patterns such as sale months, closed for remodeling, etc. as these can distort the normal seasonal breakdown.
Daily Sales Analysis. We would also suggest breaking the monthly goal into a Daily Goal. The easiest way to do this is simply to divide the total sales goal by the number of trading/selling days. For example, if the budget for June is $76,802 and your store is open for 25 days, then your daily budget is $3,072; i.e., $76,802 divided by 25 days equals $3,072 per day. Table 2 below shows what a monthly breakdown might look like:
If you want to strive for ‘Best Practice’ then your daily goal can be broken down between the sales team. For example, if Mary typically does 25% of the sales, then her personal goal for June would be $19,201, or $768 per day.
Again, the easy part is setting the sales goal, the challenge is ‘how’ to achieve it consistently.
The Edge Retail Academy provides customized strategies for retailers and vendors to increase profits, optimize growth, reduce debt, create profitable inventory solutions, build effective teams, and enhance brand loyalty and profitability. The Academy is committed to helping jewelry businesses improve their bottom line while reducing uncertainty and stress. Edge Retail Academy software and business advisors provide real-world knowledge and advice for guaranteed results, all on a “no-contract” basis. Call (877) 569-8657, ext. 1, or email Becka@EdgeRetailAcademy.com or visit www.edgeretailacademy.com.