How to read a sales report in a small shop

Most owners look at the total at the bottom, feel good or bad, and close the page. The total is the least useful number on the report. It tells you what happened. It does not tell you why, or what to do next.

A sales report answers five questions. How much did we sell? How many customers bought? How much did each spend? What sold best and worst? And how much did we keep after paying for the goods? This guide takes them in order, then shows a full report with real numbers.

• Daily sales check that the day went as expected, and that the till matches the record. Use it to spot a problem the same night. Daily numbers swing a lot, so do not read too much into one slow Tuesday.
• Weekly sales show the real rhythm of your shop: which days are strong, how payday affects you, whether the week is up or down. Compare week to week.
• Monthly sales show the trend, and are the right size for decisions on stock, staffing and prices. Compare with the same month last year if you have it, because seasons matter.

Always compare like with like. A Monday against a Saturday tells you nothing. A week with a public holiday against one without tells you little. Look for the same period last time.

Total sales is two numbers multiplied together: how many customers bought, and how much each spent on average.

If sales went up, find out which one moved. Sales of $4,000 from 200 transactions is an average sale of $20. Sales of $4,000 from 160 transactions is $25. The total is the same. The second shop has fewer customers who each spend more, and it needs a different fix.

• Transactions up, average sale down: more people are coming in, but buying less each. Look at placement, bundles and counter items. See how to increase your average sale.
• Transactions down, average sale up: fewer visits. Check the location, opening hours, competitors and your stock of the items people come in for.
• Both down: look at stock-outs and the season first.

A best sellers list ranks products by what they earned, either in units or in sales value. Read it both ways. A product can top the units list because it is cheap, and not appear in the top ten by sales value.

A slow movers list shows products that sold little or nothing in the period. Check each one for three causes: it is overpriced, it is hidden, or nobody wants it. If it is one of the first two, fix it. If it is the third, stop reordering and read what to do about slow-moving stock.

Also compare the two lists against what you stock. A best seller that is often out of stock is costing you sales. Your reorder points should be highest for these.

Sales are not profit. Gross profit is sales minus the cost of the goods you sold. It is the money available to pay rent, wages, power and yourself. See gross profit for shop owners for the full method.

A report can only show gross profit for products where you have entered a cost. If some products have no cost recorded, the gross profit figure covers only part of your sales. Fill the gaps, starting with the best sellers.

A small shop has this week's report. Read it row by row.

The weekly average sale is $4,500 / 240 = $18.75. Notice that the average sale rises on Friday and Saturday. Customers are not only more numerous, they spend more per visit. That points to stocking for weekend baskets, and perhaps to having two people at the till.

Now the product view for the same week.

Phone credit is the biggest line by sales at $400 but makes only $20, a 5% margin. Bottled water sells the most units and earns a solid $105. Candles sold none: check whether they are on the shelf and priced, or whether they are dead stock. Biscuits and oil earn the same margin, but oil earns more because it sells more.

The story the sales column alone tells (phone credit is a star) is different from the one the profit column tells (it barely pays for the shelf space). Always read both.

1. Pick the biggest gap. In the example, it is the weekend. Make sure the best sellers are fully stocked by Thursday.
2. Pick one product to fix. Reprice, move or stop buying the candles.
3. Pick one number to watch next week. The average sale on weekdays, for instance, with a goal of $18.

Write the three actions down with a date. At the next report, check whether they worked. This habit is worth far more than any dashboard.

• Judging one day. Use weeks and months for decisions.
• Ignoring returns and voids. Net sales are sales minus refunds, so check which your report shows.
• Reading sales as profit. A high-turnover, low-margin product can fill the till and leave you poor.
• Missing costs. Profit figures are only as good as the costs you entered. Update them when your supplier raises prices.
• Comparing different lengths. A month with 31 days is not a month with 28.

Shopkeepa shows sales by day, week and month, the average sale, best sellers, slow movers, low and out-of-stock items, inventory value and gross profit where a cost is known. Cashiers cannot see costs or profit. It is in development: join the early access list. See the sales and profit reports page.