How To Analyse Your Own Performance: Understand The Variables That Are Vital To Growing Your Business

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As an entrepreneur and an online seller, you are constantly looking out for ways to boost your business’s growth, but that’s not going to happen until you analyse your previous performance. Also, many don’t know how to take their small company to a higher level and keep growing it horizontally by selling more products and not tapping into sales exponentially.

Multiple variables help you understand your current business status and what’s need to be done to grow. Analysing your performance is an essential part of core business activities. As an Amazon seller, the best way to analyse your performance is by calculating the number of sales, reviews of customers, and your ranking on the search list.

The Top Variables to Help You Know How to Improve Your Business

However, there are many more variables that play a vital role. Let’s take a look at them:

1. Staff productivity

Happy staff means instant business growth. Ask your staff if they are happy with the work you’ve given them. Be open to new ideas from them. Productivity is a standard measure to compare industry statistics. In fact, sales productivity is calculated by dividing actual revenue by a number of people from the sales department.

Similarly, check for marketing productivity, manufacturing productivity, and support productivity. If any of these values get lower, look to tinker with the employee working pattern. You need to look at everything from employee behavior to employee access to different tools. Look to streamline the work flow to help you get the benefits.

2. Gross margin

Calculate Gross Margin by deducting the cost of goods sold from total sales revenue minus divided by total sales revenue. Check this for each of your products sold, so that you get an idea about the department or type of products where you need to bring an improvement. Higher the percentage better is the performance of your business.

If you are getting consistently low percentages, lower the cost of your products by choosing an alternative equally good but cheaper material or increase the cost. On Amazon, you need to stay a step ahead of your competitors, so instead of decreasing the cost, you can increase the cost slightly, give them a little more quantity because it is cheaper to add a little than deduct some.

3. Monthly net profit or loss

When you calculate the monthly profit or loss, don’t only consider the product cost and the price you charged for it. The amount will be inaccurate because you didn’t count in fixed and variable costs of operation including insurance, lease amount or mortgage payments, taxes, and salary of your employees. Subtract all these measures from the total revenue you make.

The selling price should be 60 per cent higher than the cost price for you to be able to break even. Anything below that and you’ll have a tough time making ends meet.

4. Money spent on customer acquisition

Finding new customers is always more expensive than convincing an existing one to buy your product. On Amazon, it is a lot more than that. Your rank on the search list definitely depends on good customer reviews but also on the keywords you use.

Having a good social media and marketing team will cost you but also bring in leads that turn into loyal customers. Investing in advertising is another aspect that’ll talk about your business growth. Lower the money you spend on customer acquisition, the better is your business’s performance.

5. Size of your inventory

Inventory turnover is a great variable to analyze your company’s performance. If you constantly replace your products in the inventory and the frequency has increased over the past six months or so, your business performance is optimum.

Make sure that you avoid certain challenges including purchasing products in cost-effective lot sizes, forecasting inventory requirements, and express delivery patterns. When your company shows rapid growth, invest in a bigger inventory so that the place isn’t too cramped and products aren’t lost or damaged in the jumble.

6. Total number of labour hours

If you are someone who says we’ve always worked this way, then you are using your labour hours to its full capacity. Labor is the most expensive, so collect its performance on a monthly basis. If there’s a decrease in output, investigate why it is happening.

Increase incentives and bonuses, so that your laborers are encouraged to perform better. However, you should remember that changing things too often can lead to resistance from your employees. If you want to try a new way of working, experiment it with a small group of laborers who are open to it and when successful, spread the change to others.

Whenever a product is bought on Amazon, email the customer personally and ask for their review on the e-commerce site. Schedule a business performance analysis and hire an analyser if you want. It might cost a little but would prove to be cost effective in the longer run.

3 Responses

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