By August 16, 2021
Last time, when we talked about how to increase your sales opportunities through good bookkeeping we went over how good bookkeeping enables you to track “Lost” clients. If you haven’t read that one, please go read it before you continue so this post will make more sense.
This time I want to discuss a more obvious way that bookkeeping can be used to increase your sales. Or more specifically, how bookkeeping can help you identify where your sales are costing you money.
Identifying Services That Cost You Money
Let’s speak clearly for a minute. You started your business to make money. No matter how much you love what you do, you wouldn’t and shouldn’t do it for free. We all have bills to pay, families to feed, and dreams we are trying to achieve that require money.
But when you are trying to make money, you will sometimes end up losing money. Sometimes it’s due to damaged products. Other times you spend more time and effort on a project than the money you are bringing in would pay for.
The only way you would know if this is happening is to have your accounting set up to track your income, expenses, and losses.
If you knew that a particular product or service was costing you money rather than making you money, what would you do? It’s okay not to have an answer yet. In fact, I recommend taking a closer look at why it’s losing you money before you make a decision.
There are way too many reasons why it may be costing you.
- Too much inventory on a rarely purchased item
- Canceled Orders
- Mismanaged time
- Charging too little
- Change Requests/Call Backs/ Fix orders
- Not offering the correct product/service for your area
- And many more
Whatever the reason for the loss, you have to identify it before you can fix it. Bookkeeping will give you the clues you need to see that something is wrong. And if you know what’s wrong, it’s a whole lot easier to fix it. Trying to fix a check engine light without diagnosing it, can cause catastrophic failures. Trying to fix an underperforming product or service without diagnosing it, can kill your sales growth.
Bookkeeping Doesn’t Fix Everything
Good bookkeeping isn’t a cure all. But it does give you the tools to figure out where your problems are. Ignorance may be bliss, but it’s dangerous and stupid to think that everything’s ok just because you can’t see any problems. Yes, it’s scary to know what’s really going on under the hood of your business. But if you don’t know what’s going on, you risk your business imploding or running afoul of the IRS.
I have one more method I will share with you next time, but for now. Think about this. Do you know which products and services are losing you money? If not, give me a call.