Monday, April 1, 2013

Creating Success from the Inside Out - What you need to do right now to maximize your profits

We might sell handmade scarves, beautiful one of a kind collages, jewelry, vintage finds, soap, pottery or any other untold number of products. It doesn’t really matter what it is – what’s important is that we are selling.  Selling is what sustains our livelihoods.  So how do we maximize our profits so that we sell more?

Blackbirds Baked in a Pie Tea Towel by wickedmint

It’s time to take a good hard look at our profit history.

I’ve known subconsciously for a long time that there are some jewelry styles that I just love to make but that don’t get many views or sell in my Etsy shop.  At the same time, I know that there are certain styles that sell more often.  But without actually sitting down and analyzing my profit history, I would never actually know the facts so that I could take action to maximize my profits.

Here’s what to do:

1.   Dig out your spreadsheet, software program or whatever it is that you use to keep track of the items that you sell/have sold.  You can do this analysis for any time period you wish – this year, last year, the last 6 months...  I did it for the last 3 years since that’s how long I’ve been in business.  Do what makes sense for you.

2.       Take out a piece of paper and think about how to divvy up the types of products that you sell.  Write down your categories.

You want to determine what percentage of your business income comes from each of these types so figure out how you want to compare.  For instance, if you sell hand knit outerwear, you could create these categories (mittens, hats, scarves…).  Or perhaps you sell different styles of outerwear, in which case you may want to divide your categories into children’s mittens, children’s scarves, adult mittens, etc.  For example, I sell earrings, bracelets, necklaces, etc.  I also have a bridal shop, so I created categories for bridal earrings, bridal necklaces.  For my own purposes, I also broke it down further into vintage style earrings, modern earrings, resin earrings, etc.

3.       Write down the total revenue you got in each of the categories.

4.       Next to each category list the average price point of the product. 

You probably have a range of prices within each category.  Look at what you sold (for your chosen time period) in that category and come up with the average price point (total revenue in that category divided by the number of sales in that category will give you the average).

5.       Determine what percentage of your total business income came from each category.  Do this by calculating your total revenue for your target time period.  Now divide the revenue for each category by the total revenue and multiply by 100 for the percentage.

Crow Steals Sun for the People by geminiriverrocks

Now you have written proof of what products sell the most.  You may already have known this intuitively, but seeing it on paper and seeing how much your best selling products are contributing to your bottom line can be very helpful for focusing your energies in the future on the products that are yielding you the most revenue.

I sell far more earrings than necklaces or bracelets.  Since doing this exercise I’ve given myself permission to go crazy making earrings and not worry so much about having enough necklaces and bracelets in my shop.  In doing this exercise, did you confirm what you already knew or did you discover some new insights as far as where your revenue is coming from?

A little plug to the fabulous Rich Happy Hot B School, the online marketing course that I am taking right now which is transforming the way I look at my business and teaching me how to turn my business into the best it can be.

Next time, I’ll talk about the number one thing I learned recently that we must do in order to prep our businesses for total success.

1 comment:

HuzzahHandmade said...

Great article and I'll definitely check out that course.Thanks