Every day a company has expenses. Sometimes money comes in and sometimes it doesn’t.

* Does your company have depression or holiday burnout?
* Are some parts of your business more active than others (sometimes)?

There are two ways to measure sales: count money or count sales. Sometimes they are related and sometimes they are not. Let’s look at some ways to fix this.

How many sales?

Sales volume over time is the number of items a business sells per unit of time. A sold item is an item sold at a discount or not. A company can track sales volume by customer, by product or service, by product group, or by location. Inventory turnover is also a simple measure of sales volume.

* Sales volume are billable hours for accountants and attorneys.

* Sales volume is the widgets sold for a company that sells products.

* Sales volume is the number of real estate agent closings.

* They are policies written for insurance agents.

The number of items sold is a key measure of business activity.
Large volume changes are easy to see, but most changes are incremental and not so obvious.

Changes in revenue do not necessarily predict changes in volume. A high volume sale can mask a drop in the number of sales. A business needs to know both numbers.

We want to analyze sales volume patterns and their effect on your business.

Seasonal business

Some products and services have natural peak seasons during the year. The best seller in the world will have trouble selling air conditioners in Canada during the winter.

* People buy more air conditioners in the summer.

* They are also more likely to buy a refrigerator in the summer.

* Stove sales peak before the Thanksgiving and New Years culinary frenzy.

* Enrollments for gym memberships peak in January.

* Sales of consumer electronics products typically peak in March and April. The exception is large screen televisions. They peak just before the Super Bowl.

* Liquor and wine stores sell more than twice as much product in December as in any other month.

Some products, such as automobiles, are both cyclical and seasonal.

Track your sales volumes each month to see if this is true for your business. Compare from year to year. These numbers can also measure incremental improvements in your business or give you an early warning when things are not quite right.

Cyclical business

External factors influence some companies more than others.
Cyclical businesses are found in sectors of the economy that go up and down with things like interest rates or tax laws. Cycles can be short (months) or long (5-10 years).

* Mortgage volume rises and falls according to changes in interest rates.

* Low interest rates drive the construction of new homes.

* Health insurance costs are tax deductions for employers.

* Changes in tax laws can push businesses from one state to another.

Small businesses cannot control these factors. Staying in business requires a frank and honest look at cyclical drivers and a flexible and creative response to change.

What can you do?

Appliance store owners have a higher success rate than many other types of small businesses. Let’s look at your sources of income.

* They sell refrigerators in summer.

* They sell stoves in the fall.

* They have white sales in January and February.

* They sell vacuum cleaners because dirt passes.

* They sell parts and services: breakdowns are much less seasonal than sales.

Car sales are cyclical and seasonal. They are dependent on interest rates and peak sales are in the fall. Sellers earn commissions so owners don’t have fixed salary costs.
However, because repairs and maintenance are not seasonal. These employees tend to have salary plus commission.

Measure your sales and act

We can help you identify the patterns in your business and your industry. We can identify solutions that structure your business to smooth your sales and income. We are Biz 4 the rest of us.

Copyright 2006 You may reprint the above information in its entirety in your publication or newsletter. For permission, contact us.

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