Review your information on customers and sales
Often small businesses earn the majority of their income from a small group of customers or product base. If you understand these patterns, you can spend more time in these areas to quickly increase your sales.
How to review your sales and customer information
- Review your sales data in detail – list the sales in order of sales amount per customer or sales amount per product sold.
- Calculate the gross margin for each customer's sales or each product sold.
- Make a list of those customers or products that provide the highest gross margin.
- Look at ways to increase sales to customers in the list, or to increase the volume of the products in the list, such as targeted marketing.
When reviewing sales, and between reviews consider:
- implementing a Customer Relationship Management (CRM) system – it allows you to collect and manage comprehensive details on your customers' buying habits and other important information
- regularly checking your product pricing to ensure you maintain the appropriate gross margin on each product
- marketing to create more demand – try a marketing event
Review your cash handling controls
Minimise the risk of theft or fraud by maintaining strict controls over cash.
How to review your cash handling costs
- Look at all elements of your business where cash is involved and note each one.
- For each cash element noted, review the controls and procedures to safeguard this cash.
- Make a list of the areas where cash handling procedures can be improved – use our financial policies and procedures template to help you write new procedures.
At a minimum, make sure that:
- your accounting and financial policies include:
- a petty cash policy
- a policy to protect employees who are handling money
- a policy of banking regularly
- cash receipts are kept separate from cash payments – this will make record keeping more accurate and reduce the temptation to inappropriately spend business takings
Lower expenses – even for a short time – to help you get through financially difficult times. Even in good times, keep a close eye on expenses and actively manage your cash flow.
How to review expenses
- Run two profit and loss statements – one for the past year and one for the year before.
- Review all expenses in the past year, noting where there have been substantial increases in expenses.
- Look for ways to reduce these expenses, or evaluate if they're really needed by the business.
When reviewing expenses:
- don't forget to include a review of staff costs – increasing productivity or improving rosters can reduce these costs
- look at business contracts such as mobile phone, bank charges – research alternatives to reduce costs
- negotiate pricing with suppliers – don't limit this to stock, look at services provided to your business such as cleaning, accounting support etc.
- use benchmarking to look at the costs other businesses in your industry are paying