How to track and improve profitability
As a business owner or manager, you’re always looking for ways to improve your bottom line. Profit is what happens when you do everything else right, right? This idea puts immediate pressure on many SMEs that struggle to understand the profitability of their business. The complexity involved in calculating and tracking profitability puts a huge spanner in the works.
Fortunately, technology has come to the rescue, to make the process easier than ever before, and help you do things right - like tracking profitability across your business. It starts with the data generated by your operational and accounting software, and flows from there into meaningful, insightful reports you can actually understand.
We define profitability as the amount of money a business makes after deducting all expenses, or the profit margin a business earns on its sales. To calculate profitability, you need to determine your gross profit (revenue minus the cost of goods sold) and net profit (revenue minus all expenses, including operating expenses, interest, and taxes).
With a clear understanding of your profitability, this information helps you to make better decisions and identify opportunities for sales. Let’s say for example, you discover that one of your products or services is more profitable than others. With this knowledge in mind, you can now focus your marketing efforts on promoting this particular product or service with increased sales and profit as the end result.
There’s another benefit to tracking profitability: it helps you identify potential risks to your profit and margin before they turn into losses. For instance, if it reveals that your operating expenses are increasing faster than your revenue, use this red flag to reassess your expenses and find ways to reduce them. If, on the other hand, you notice a decrease in your profit margin, it may be time to evaluate your pricing strategy or look for other ways to increase revenue.
Using data to make better choices
Wink Reports is a SaaS reporting and analytics tool that gives business owners access to the important information hidden in their data. It becomes your own source of business intelligence that helps you make better decisions, based on hard fact.
You can create custom Wink reports that show you the metrics that matter most to your business. On the Wink platform, you have access to report templates, ready for you to use at the click of a button. The time you used to spend trying to figure out how to build reports from scratch can now be used on more important business activities…
Let's say you run a trade or field service business, and you want to identify which employees are most productive or which ones need additional training and support. You can use Wink Reports to create a custom report displaying the billable hours and utilization rates for each of your employees. That’s your own accounting and operating data put to good use for better business outcomes! A report like that can also help you identify which jobs are the most profitable and which need to be re-evaluated.
As a product business owner or manager, you could create a report that displays your inventory turnover rate and DSO. That is if you want to, for example, identify which of your products are the most popular and which ones are collecting dust on a shelf. A report like that can also help you identify any customers experiencing delays or issues with their orders, so you can address these issues quickly and improve customer satisfaction.
In a sense, you can get ahead of a problem by assessing performance (looking at the data and analyzing what it means), and take decisive action that allows you to sidestep that problem.
Tracking your bottom line
There’s a straight line between effective tracking and access to accurate and up-to-date data. Like many SMEs, you probably use some form of operating and accounting software that generates data. That’s great but what’s not so lucky is that these data sources often aren’t integrated - getting a clear picture of the overall profitability of your business becomes a major pain.
Wink Reports can shine a timely light on your bottom line. It’s a SaaS reporting and analytics tool that helps SMEs access the business intelligence hidden within their operating and finance data. You can use Wink to merge data from your various business tools, and emerge with a complete, accurate picture of your business and its profitability.
Flexibility is a key feature: Wink Reports offers spreadsheet-style custom reporting. You can use it to create custom reports tailored to your specific business needs, whether it’s tracking profitability by product line, sales channel, or customer. Ask the relevant questions, take advantage of the accuracy offered by real-time Wink Reports based on live data, and get instant access to the business information you need to make better decisions.
Speaking of instant access, you can also benefit from ready-to-use Wink Reports templates that are available at the click of a button. In addition to covering a range of topics, from financial reporting to inventory management, you can easily customize these templates to match your business needs even more specifically.
Profitability visualized and demystified
A powerful learning tool helps you discover, see and understand, share and act on information quickly. Wink Reports takes you through discovery as it analyzes your business data and offers a visual learning opportunity.
The purpose of business intelligence is to enable business owners and managers to visualize their data, and that’s what Wink does: it enables you to present your data clearly and concisely in graphs, charts, or tables that simplify your profitability reports. And visualizing data this way makes it easier to identify trends and patterns.
To ensure key members of your team have the information they need to do their planning and make decisions, and to keep yourself on top of things, it’s important how discoveries are shared. Wink takes a load off your shoulders with the ability to automate reporting tasks. You can set up automated Wink reports to be scheduled for delivery to your inbox (and that of your teammates). This also saves you time and keeps everyone up-to-date with the latest, freshest data.
Keen to improve your business outlook?
We can’t stress enough how essential it is to track your SME’s profitability if you mean to improve your business outlook. By understanding what contributes to profit, you’re able to make better-informed decisions. You can identify opportunities for new sales and identify potential risks to your profit and margin before they have a chance to become losses.
Tracking profitability for your business has never been easier! If your SME’s profitability is shrouded in mystery, take advantage of our 30-day free trial and put Wink Reports to work for your business.
How has data helped you move your business forward? Leave a comment to share your insights with other business owners.
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