Empower Your Small Business with Sales Process Analysis for small businesses

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hello and welcome back to the Clara CFO group Channel today we're going to talk about how to analyze your financials so we're kind of at the beginning of the year we want to look at our financials for the past year and where we want to start is in Revenue so we would like to dissect Revenue in a bunch of different ways so that hopefully it will be able to reveal some Secrets give us some answers give us some information that can be helpful to us as we're running our businesses and maybe we can give you some tips today that will help you look at Revenue in a way you never have before that will hopefully reveal something helpful to you to keep your business growing all right so if that sounds good please stay tuned if you aren't already subscribed to the Channel please make sure you are subscribed and make sure you also like this video because it certainly helps us out and also like if you have any questions as we go along make sure that you've got comments you've got the comment section open for you put your comments in there ask some questions we do try to read those and we try to respond to everything in the first 24 hours so if you want to make a comment try to do it as quick as possible but we still monitor comments so always know that that's a way that you can reach out to us there and we also get some ideas for videos there so if you have questions sometimes those get answered in a video so that would be pretty cool right all right so we're starting a series of ways that you can analyze your financials and how to dig a little bit deeper this is going beyond the profit and loss statement okay so a lot of times you might say hey I know my numbers because I look at my profit and loss but you can actually go deeper into those numbers or pull the information in different ways and dissect it and see what it might reveal to you so today we're going to go through five ways to look at your revenue and your Revenue remember is all the sales coming into the business okay so Top Line Sales here we're not talking about profit we're not talking about expenses in this video the expenses we will look at in a different video but what we want to look at today is revenue and I'm going to walk you through a couple different ways that we can look at revenue and some of this might be straight on your p l but some of these might we might need to dig a little bit further and figure out how we can find out this information and some of these are going to be better for product-based businesses and some are going to be better for service-based businesses so just take what makes most sense for your business and then also feel free to share anything else in the comment section below about how you might be looking at your Revenue because this is just five there are other ways that we can look at revenue and break things down so let's share our information if something's helpful to you in the business help another business owner out and put it in the comment section below so my first tip about how to break down your revenue is to look at your Revenue based on service lines so this would be best for service-based businesses so this is where I would say you know what types of things are you actually doing in your business and break those things out so let's say you offer five different types of services let's say for an accounting company for example that they provide audit Services bookkeeping services tax preparation Services special tax planning survey services and then let's just say another like maybe they do ertc work okay so they've got five different service line items that they're making money from now what ideally we'd like to see is that those things are already on the profit and loss statement and that they're separated out because you know that I like a nice separated out profit and loss statement if you watch any of our financial reviews but sometimes people don't have their system set up like that and they might just have all of that information rolling into a Services line and maybe they have some other products that they sell so maybe all the services are lumped together like that but I want you to dig into detail to find how do you break out that information and this is where you might have to dig into potentially a separate system so you might have maybe an invoicing system that's outside of the accounting or you might have a Time tracking system that you can estimate revenue on you might have some other level of detail where you can pull this information so this is like I'm I'm telling you like this is a good time to like sit down put a couple hours on your calendar and start figuring out like where all of this information is think to yourself what systems are does does Revenue data like sit in and then you might be able to say okay well I know that every time I put this line item on an invoice it is this type of service so this might take a little bit of time to gather the information that you need but you really need to be looking at what are you doing that's making money and when you do this it's going to help you figure out what should you be doing more of what things are complementary you might be able to see Trends year over year uh you know maybe our bookkeeping services grew double but our audit Services were down this type of stuff will help you get information that can ask you that you can start asking yourself why and then you can start tracing it back to operational steps and if you want to repeat that process in growth or if you want to avoid you know losing Revenue in a certain way this is a time that you can start digging into those numbers and really start asking yourself questions and you'll be able to get some answers so Revenue by service line is the first way I'd like you to think about analyzing your revenue and remember you guys none of these are in any kind of order I'm just trying to give you different ways that you can break down your Revenue okay so none of these are maybe best all-around but all of them can be kind of a game changer if for you depending on your business and all of them can give you a lot of insights so why not try all of them that's what I like to say all right and so the second way we can break down revenue is revenue by Channel and when I say Channel what I mean is how is the revenue coming into your business this can be really helpful for e-commerce businesses or even a product based business in general you might have you know a retail channel of your actual like retail store but you might also have wholesale that's coming in from a different Source you might have an e-commerce platform or maybe even multiple e-commerce platforms I know a lot of e-commerce sellers will sell on something like Shopify but then they'll also have Amazon sales coming in or maybe they sell you know directly to big box stores things like that you can break down all of your sales data to try to figure out where is the money coming from this can also happen from service base with service based businesses and it can happen with other types of businesses but I find this this type of breakdown to be super helpful in the product based business so where is the money coming from this is really helpful because you can understand you know do I need to try to protect that one channel morgue do I need to double down into certain types of marketing do I need to be concerned about 90 of my Revenue being controlled by Amazon for example you know do I need to start to change my mix a little bit because it might get you into a place where that one big sales Channel if something happened you could be in a tough place so this is again just fact Gathering here where is the money coming from and does it should we be making different business decisions or should we double down into other business decisions and and this is another really great way to look at your Revenue now the next way I want you to look at your revenue is either by client customer or contract so these are three different options but it all kind of can you can break it down in different ways so I love looking at Revenue per customer client and I think that this is really helpful so you can identify who are your biggest customers and what you might find especially in service-based businesses is you might find that 80 of your revenue is coming from 20 of your clients I've seen this happen before and so this is where you can start to look at your Revenue by client and you can look at who's really great to work with who's not great to work with this is a really good exercise if you're trying to call your Client List and you're trying to say like you know we really it would be better for us to be serving fewer higher quality clients this is a great report that you can run now I know that QuickBooks has a report where you can do Revenue uh by customer so as long as your data is coming into the system correctly you can run reports like that now sometimes I see that people's data is not being tracked appropriately so then when you go to try to run a report that's a canned report if you weren't marking income coming into the right customer then it's not going to spit the right ports reports out always remember garbage in garbage out principle if you've got good data coming in you can usually get good reports coming out but Revenue by customer is really helpful I like to see this even in something like e-commerce because you could start to identify maybe you've got some super customers people who are always buying from you and they might be the ones that you might want to start to you know figure out how to attract more people like that or what is it that's special about them you know maybe you can even like you know give that person like a little bit of attention that might you know help them be even more of a super fan for you so looking at this regardless of the type of business that you are is really helpful so I have another system that I run some of my billing through and it flows into QuickBooks so what I was able to do is actually pull from that system and run some reports on that system and then also take QuickBooks information and kind of combine it this is where Excel skills can be very helpful maybe somebody on your team has Excel skills certainly your accountant if you need help with any of this information they should be able to pull this type of information for you keep in mind that some of this information might be outside of your accounting system and you might have to go to another system to find it I'm trying to think of some other things that people might be using at this point in time but if you have maybe a contract management system or even a CRM that might actually have sales data attached to it that might be a really great place to look for this type of information as well so Revenue by client or customer or or even contract can be helpful to look at now another thing that you might want to take pay attention to and this is our fourth one is revenue by location if you have the ability to look at where your Revenue was earned which everybody should have to some extent because you might be triggering some tax implications if you're earning Revenue in different locations so we should have some way to track where our customers are when they buy from us or where we're earning the money now with this you can find out a lot of information if you're tracking Revenue by location and this is again not something you're going to find on the p l you're not going to see like revenue from Washington state revenue from Oregon revenue from California you know that's not appropriate for the top level profit and loss I would not want to see that in any way shape or form so this is going to be going into another system and identifying where are our customers again e-commerce this is really really important for sales tax liability stuff but even if you are in a service-based business of some type you might want to see I saw this client one time that had this really amazing chart of where he was a local electrician and so he had this chart of where his clients were and he could have sort of this heat map of where his um you know service calls had been so then he could start uh pinpointing the marketing to those different locations and maybe if he felt like he had saturated a certain area he could move on to another area where he wanted to gain more of a foothold but if he didn't have that location data he wouldn't be able to pinpoint his marketing so this is really important and I think that it's really good to pay attention to where our people when they're buying from you where are they from or where are they buying at so if you have physical locations are they coming to a certain location this location is bigger than that location great for a restaurant or something like that if you've got you know multiple chains of the exact same thing maybe a certain restaurant is much more popular in a certain location than maybe another location and you can start to analyze you know does doesn't make Financial sense to have both should we consolidate and you can make financial decisions from that so Revenue by location lots of insights that can be had in that analysis and the last thing I want to bring up to you is revenue by product so I really like looking at when you look at all of your products that you're selling and I mean product both on an actual physical product if you're you know e-commerce or you're selling Goods or even if you have a you know digital product that you're selling or even like a service type that you're selling so like in our situation we sell CFO services and so on a p l everything that goes into CFO Services might be lumped up into that one service line but we have different products in that so we have our foundations package our signature package and our fractional package so it's great to look at how are those broken out which one is the most popular what is our mix between products all of that stuff can be really helpful in analyzing you know in making decisions going forward so with the product if you are starting to see wow we know I mean hopefully you would know what your best sellers are just off the top of your head but you might need to break that information down further and maybe you'll get some really great insights to you know other products that you didn't know were selling really well or maybe something that you would be selling more if you could keep inventory of or um you can see like maybe trends of this product used to be amazing but now people aren't buying that anymore and now we're moving in this other direction and you can start to think why why is this selling more than that is it tied to marketing could we push this further do we want to push more attention on something that's maybe a little higher profit margin do we want to change the pricing of that product what can all this stuff do what I want to give you guys is ways to break down the information and start to just glean great little insights that can help you make better decisions and so we're not just you know making decisions out of thin air we're trying to make decisions based on good data all right so hopefully this info information is helpful to you and if it is please make sure you give this video a thumbs up and put any questions in the comment section below thanks so much you guys [Music] [Music]