To make sure things are moving along nicely for your business and not slipping into problem territory, here are eight numbers to keep a keen eye on.
With Square Analytics, you can generate sales reports by day, week, month and year. Your month-over-month reports give you a solid indication as to how business is trending. And aside from seasonal dips, you obviously want to see that number moving up.
But you need to look at your sales in context, too. This is why generating a profit-and-loss statement (P&L) every month is also important. You don’t have to see a huge spike in profitability, but even a small, steady, month-over-month percentage increase is a positive sign that you’re on the right track.
You want your expenses to stay flat. If your business is in the midst of taking off, your expenses may do likewise, but in general, you want that increase to correlate to your increase in revenue. That means if your revenue is increasing 10% month over month, your expenses should ideally increase no more than 10% during that time frame as well.
3. Cash flow
Even if you’re investing heavily, you need to have a healthy cash flow. This is paramount should the unexpected happen — say, if a client doesn’t pay on time or if you need to replace a critical piece of equipment.
The optimal size of your safety net depends on the volatility of your business and industry, but generally speaking, your cash reserve should equal at least a couple of your key financial obligations.
4. New versus returning customers
Businesses can fall into the trap of believing acquiring new customers is what’s key. But while it is important to make sure you’re bringing in fresh people, it’s your repeat customers who are truly your bread and butter.
A study found that when customers return, they spend roughly 67% more than first-time customers. Watch the percentage of returning customers you have each month closely in your Square Dashboard.
5. Sales reports by location
Make sure you’re keeping a close eye on all your shops. In the Square Dashboard app, you can see real-time and historical sales information for each of your locations. This data can help you quickly identify which locations are running smoothly — and which might need a little TLC.
6. Activity ratios
It’s important to determine whether you’re doing a good job generating revenue from your assets, inventory and resources. For this, you need to calculate asset turnover, inventory turnover and your operating expense ratios regularly.
7. Your rank in search
If no one can find you online, you’re going to lose customers to the competition. Your business should show up as the first or second search result when people Google your name. Ideally, you’d also show up on the first results page when people Google a related search term (‘best jewellery shops in London,’ for example).
There are a number of things you can do to improve your business’ SEO ranking, including consistently updating your site with fresh, relevant, keyword-rich content and making sure everything is optimised for mobile. For an added push, it may also be worth hiring a contract SEO consultant to help get things off the ground.
8. Your social media engagement
Consistent likes, comments and shares on your social media posts mean that people are interested in your business and what you’re up to. People getting actively engaged in your brand is a good gauge that you are moving in the right direction when it comes to connecting with customers in a meaningful way. If your engagement is lacklustre, on the other hand, you may need to start doing more to get on the radar.