A while back, I posed a question to a number of industry comrades: How do you manage your business? Do you track statistics?
I was shocked at the answers. No one who answered me has any real system to determine if their company is expanding or shrinking.
I received vague answers – “Everyone seems to work hard” and “Well, I know if I have money in the bank, I am doing good.” Really? Because money in the bank is a poor index. Tells you almost nothing. What about your bills? What about having enough abundance to invest in personnel, technology or equipment that will expand your market share, and allow you to pay your staff better?
If you are “just getting by” as too many businesses are, then something about the way you are managing has to change in order to improve the scene.
If you have a stat increasing (such as gross sales), then don’t change what you are doing, because it is working.
If you think just long enough, you will probably remember a time when you changed something that was successful and things then went to hell. You effectively threw away what WAS working for you.
You can probably think of a time when some statistic was lessening, (perhaps your sales were going DOWN). As long as you left things the way they were, changing nothing, the statistic did not respond, it only crashed further.
If you are one of those people who does not track any stats at all, you should seriously consider it. All the big companies in the world have sophisticated systems of tracking their income and outgo, product shipped and delivered, most popular products, etc. etc.
You don’t have to get super nerdy to start tracking some statistics.
You can start by determining what to track. I will tell you what we track here at InnoPack. This will give you an idea of what you might look at:
(all tracked on a weekly basis)
Gross Sales – total sale amount
Net Sales – total sale amount on product only (no freight, set-up charges, rush charges, etc.)
Dollars collected – as some customers are on terms, this shows money in hand
Cash on Hand vs Bills
Inquiries – Number of unique inquiries from customers, asking about a product, samples, etc.
Quotes – Number of quotes sent that week. Our average is that we close 1 in 3 quotes sent out.
Samples Sent – How many sample packages sent out.
Letters Out – Letters via snail mail, and email, and fax. This represents a number of people individually contacted (as opposed to bulk marketing like postcards, mass emails, etc.)
Bulk Promo out - # of mass emails out, or bulk mailing pieces through snail mail.
Dollars Shipped – this shows the value of orders shipped that week.
We have reports we can run in Quickbooks about which products are moving better than others. Popular colors (so we can invest in the correct inventory), sales figures by salesperson (maybe one guy produces a lot more than others. You wouldn’t want to treat your top producer with the fire you might set under someone who is not producing. Validate the production instead! Get that guy to help others to become more successful. See what I mean?)
There are lots of software programs that you can use to GRAPH the statistic, so that you can see the trend over a time period…If the stat is going down, you have contraction. And if it is up, you are expanding. We use one called “Management by Statistics” by Mastertech.
It is important to REGULARLY look at your stats. Not just once a month or a few times a year. Look at them WEEKLY and adjust your activities to increase the production. And watch if the stats respond. If they don’t, you have missed something.
Ignorance in managing your stats is a guarantee that you will contract. If you are doing well in an area, somehow, you are doing the right thing. Why not inspect what you are doing to improve it even more?
WHAT WAL-MART DOES:
A few years ago, we had a retail sunscreen division. We sold to mass market retailers like Wal-Mart, Target, Albertson’s, Kroger, and so on. Each of the retailers had super sophisticated statistical information that they tracked heavily.
Wal-Mart has the best system, with the most features and a real-time reporting system. As a vendor to Wal-Mart, we could log-in and determine which of our products were selling best, in which region, down to which store even. We could also see how we were faring against other sunscreen brands.
We knew when to get the buyer to order more. We knew how much to sell to a certain geographical area, based on how it had done previously. We could compare the weather in that zone to other zones. This also prevented us overselling an area, and then having returns at the end of the season, that we would need to buy back. (Sunscreen is almost always sold to retailers on the condition that the manufacturer will buy back any product that doesn’t sell. Called a “Guaranteed Sale.”)
You can see that how their statistical software really helps vendors to know how to make the most of the retail experience.
Wal-Mart’s buying staff were very organized. They could get anything they needed in terms of stats in seconds.
As the largest retailer in the world, it is worth looking at what they do that is successful. And statistics are not a “Nice to Have” – they are a necessity.
Don’t just guess how your business is doing. Take a causative action by LOOKING at what the numbers say. And then you will know where you are doing the right thing, and where you need to fix things.
I am happy to discuss this further with you. Call any time.