I got several enquiries on how to assess this week's trading. When we discussed it, it became clear that there has been a problem over the past year; dramatic changes have occurred in retail sales.
So the first item I would recommend studying is your gross profit figures. The most popular tool for evaluating the operational performance of the business is gross profit. Net income (the bottom line) is a better measure, but that is hard to determine in SMB. Many costs, like the owner's costs, are value judgements with different people valuing them. Still, you will not get your net profit figure without the gross profit figure, so once we have that, we can proceed to other measurements.
Plus, a business has expenses, and the gross profit pays for them, so we all use them.
I recommend going by departments.
Now to get this will take you a few seconds
Register report> Sales Register> Dissection Sales / Profitability for a Given Period
For the period you are concerned about, select a suitable period.
I would recommend first doing last year, then doing the previous three months and then doing last week in separate runs.
That report will give you a lot of detail by department, including the Quantity sold and %Profit. These are often excellent signs of what is happening. Many consider quantity sold to be almost as important as profit.
Once you find something you want to investigate, click on the left-hand side to see the green arrow. Now select the shop.
We call this drill down. You will find the details of what is in every department than their sub-categories.
What you are looking for in your own business is to run the numbers. Figure out your sweet spots. Look at the specific ways that you can increase your profit. Start by looking at the items on the top with solid growth potential, high quantity and high profit. Then those that are on the bottom with low quantity and low profit.
This is something that every major I deal with does religiously.
