As long as you’re not operating at a loss for a projected period which will ultimately result in the failure of your business, even if your profit isn’t all the big, having good turnover is generally a good thing. Why?
Well, for one, turnover means that there is an actual market in the space you’re playing. There is demand for the product, service or solution you’re offering and there’s a proven subsequent market of buyers who want your product or service. They’ve shown you through the act of taking money out of their pockets that they are willing to pay for what you’re offering.
If you are indeed currently operating at loss, taking the hits as part of a greater expansion plan, or indeed if you’re breaking even, as long as your core business operations don’t suffer, it’s okay to turn a bit of your attention towards maximising turnover. Just be sure to make sure you keep records of the turnover, the best of which ways to do so being honouring standard bookkeeping and accounting principles.
The thinking behind this is that should you eventually come across someone who might be able to help catapult your business to the next level, taking it from a place of running at a loss or merely breaking even, they’re keenness to jump on boards could come down exclusively to their look at your books and the subsequent action.
Again – turnover is the ultimate barometer for a paying market…
How do you go about boosting and maximising turnover though? There are a few very basic ways…
Build up good network capital
Focussing on the construction of some good network capital will effectively have you killing two birds with one stone. On the one hand it’s one of the proven ways to directly maximise turnover, but it’s also something positive you’re doing for your business with somewhat of a longer-term view. You’re accounting for how things could play out and consolidating in the best way possible, which is that of solidifying systems as and when they’re being constructed.
What is network capital though?
Network capital is simply the relationships you have with the key players in your supply and distribution chain. You would be justified in including customers in the mix as well, because then you can point to those customers with whom you have the kind of relationship through which you can extend credit, i.e. delivering the product or service you’re offering and then trusting that they’ll honour their payment when the time comes, like being billed at the end of the month. Moreover, thanks to accounting automation tools, keeping track of any bills has never been easier. If you would like to learn more about accounting automation tools, you can find plenty of helpful resources on websites such as https://chaserhq.com/ for example.
On the side of the suppliers and distributors, having a good working relationship, i.e. network capital, simply means by example that they could perhaps supply you with the raw material or other supplies you use to render the service of create the product you’re going to retail, on something like a 90 day invoice. The advantages of that should be obvious, because then it means they’re familiar enough with your operation and trust you enough to effectively be part of the to-market process and only collect their dues once the end-user business has been facilitated.
Turnover looks excellent in some accounting books!
The same thing can happen with the distributors who subsequently form part of your solid capital network.
Increasing sales volumes
This may appear to be a technically obvious suggestion to help maximise turnover, but it’s often overlooked, which is why it needs explicit mentioning. In any case, actually increasing sales volumes is the challenging bit about the concept, because I mean if you would have already been able to reach all the potential customers you could, that’s exactly what you would have done, isn’t it?
So the discussion under increasing sales volumes as a way to maximise turnover comes down to employ some clever tactics which can have you making more sales with the same amount of effort put into your existing marketing and distribution channels.
Let’s say you’re a car salesman, just to make a very simplistic example, what can you sell in addition to the cars you’re trying to push off the lot, without irritating your buyers and without having to incur any extra costs? Does auto insurance fit the bill, perhaps, as an affiliate of an established auto insurer?
It sure does…