Friday, January 01, 2010

End of Year Reckoning

At the end of every year, I make a trip to the office supply store and buy new folders, year-end tax forms and envelopes, and a big file box. It is the one time when I clean out my files, save tax info for the year, and prepare nice new clean files for the coming year. I have come to look forward to this file cleaning, and find that each year I have saved a little less of the paperwork which does not have anything to do with tax preparation, and so that's a little less to toss out.

My accountant likes it, too, that I am getting more and better organized each year! In November I sent a preliminary copy of my finanacial program for a review and it came back clean! Now, the only thing I have left to do is count the inventory and this company's financial paperwork will be complete.

This is also the time when I sit down and quietly look over a handwritten Sales Journal which I have kept all year. It's a simple chart, really nothing more than each month's totals and only one breakout for state sales (as I have to pay state retail sales tax on all sales within Virginia). The year's chart takes up two facing pages of the account journal, which is nothing more than a 12-column bound blank book I bought at the office supply store.

This week I will turn the page to a clean set of facing pages, and note the months across the 12 columns. At the very ottom there are two lines: Month's Sales (total of Virginia and other sales figures) and Cumulative Sales (where each month is added to the previous total, so I can see at a glance the year-to-date sales).

I have been thinking about the one other step involved in turning that page to a clean slate, and that is the forecast figure. It is so hard to predict sales for the coming year when we do not know what might happen in so many areas of our lives. The economy hit lots of folks in the pocketbook this past year, and then there is family and health which can impact a forecast, but all the same, coming up with a good estimate of the coming year's sales is an exercise I go through every single year. Actually, I don't usually do very well with my estimate, and this year was the only time I have ever come in close to the number I picked out of the ethos twelve months ago. In the past, it has been impossible to predict the growth rate of the business, and I underestimated big time every year. This year, though, I came in just a little over the estimate, which was nice. I feel like I have started to see actual trends, even though the business continues to grow, there are basic buying patterns which are starting to come to the surface.

Planning and predicting and getting a handle on all aspects of business is something I want to encourage every single customer to do. Starting with the figures for year 2009, now is a terrific time to commit to paper the costs and income involved in doing business. Many of my customers are work-at-home mothers with family responsibilities over and above the running of their dye business; however, this should not be an excuse to leave the numbers just out of reach. When we are in control of the numbers, we are powerful. We know what to expect, where to make change, how to create profit.

So, today, the first day of January 2010, I challenge anyone who has not yet come to meet their own numbers to start immediately. It does not have to be a big production, but should be an organized approach. You'll need a folder for expense notes and receipts, and a folder for sales information, and a nice clean pad of paper to add it all up. If you have a separate checking account, chances are that most of your expenses and your sales income will be recorded in the register you've established for your business. If you have incorporated the business money into the family money, take some time to go through the entries and note down every deposit which came from yarn sales, and every expense involved in supplies, shipping, inventory. Create a list of income and expenses for each month, and then reorganize it into a neat presentation which will be a model for next year's records.

PayPal is a place where we overlook sales and expenses, so be sure to call up a report for the full year for all sales receipts. Also, create a report for all payments you made out of your PayPal account. Add this payment figure and the balance on hand at year's end in your PayPal account to the year's total sales, to get an accurate figure for the year.

Good luck with this! Make record keeping a monthly habit, and take a look at what your numbers are telling you about your business.

One of the basic lessons of Marketing 101 is: The way to make profit is to cut expenses, and increase sales. Most of us need to do both, of course! This might be a good time to look at the expenses involved in your business, and to see if there are ways to streamline any. Shipping, for instance, can really eat up the cash, and when you consider the cost of packing materials, the figure goes up.

Are you utilizing some free services? Get a account and use the free boxes from the postal service. Also, use Click 'n' Ship to get online discount on shipping fees. Too, sign up for Carrier PickUp. I have been signing up for Carrier PickUp one month in advance for a couple of years now. I know, I know that the questions ask how many packages and what is the total weight for each day, but I just fill in a month's worth of 100 pounds, ten packages! And, it works well enough. When you are busy, you need to plan ahead, so sign up for a month of pickups and don't worry about the details in the form.

All the talking heads on TV and radio tell us that 2010 is the year to see a definite turnaround in the economy, and I keep hearing August as a date when things should be normalized. I believe it, and I know that our little tiny end of the economy will prosper because we have remained strong all through the worst of it. Don't forget that when economies suffer, the home becomes more important, and what do we sell if not comfort, hominess. I urge each customer to stay positive, get a handle on your money, become powerful as you use what you have to the best advantage.

Let me know how you get along!

1 comment:

Bad Amy said...

Great insight. Thanks!