How Graphs Can Be Used For Your Business
Graphs can be used by Financial and Non Financial managers in a variety of ways.
Sales
Sales Managers have targets that are set for them by the company they work for. They can track their sales in a variety of ways.
Our example shows Sales split by category/or segment and shown against budget. Targets that were set at the beginning of the year.
This graph also tells you the most popular and productive products on sale.
You can take this further and look at the margins of each product category, you might not sell a lot of something but if it returns a higher margin/profit rate, you don’t have to sell as many to get the same profit figures. There may also be seasonality in that product line.
Ie in hot weather a newsagent may sell a lot more drinks than bars of chocolate.
In cold weather the icecream freezer might go untouched. Easter, Half Term, Christmas. You would tailor your sales targets to match demand.
Apply this method to your particular product line.
Cashflow
You might want to set yourself a target bank balance for you to meet your overheads and make a profit.
The graph will show against budget whether you are meeting that goal.
It also gives indication of the business behaviour, see our example the graph shows above the line at first, then dips over February to April then comes back up. Back into the target position and above.
If the graph had shown erratic it would give an indication of how well the manager is managing the business. In a planned approach, or finger in the air approach.
Gross Profit
This is a key figure in your accounts, it indicates whether you have made enough sales to now cover your overheads and make a profit.
Our graph shows a rise and then a sharp dip in May, this could be down to several factors. The Sales themselves were generally low that month, an error in charging the right selling price for a new product line, an operational issue.
If you see a dip in any of these things, look for the reason, if easily explained, you could be putting action in to put yourself back on track. Also look out for high peaks, these should be explainable. ie a new contract, timing issues, seasonality, or it could be an error.
This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.
