Many times it happens that, although there is a good sales volume, the results reflected at the end of the month are not satisfactory. Possible reasons that can generate or contribute to this situation.
On many occasions, although there is a good sales volume, the reflected results are not satisfactory. It is important to stop and analyze some possible reasons that can generate or, at least, contribute to this situation.
To begin with, we must bear in mind that, although it can be generating a high level of sales, both the high direct costs and the general expenses directly affect the profitability of the business. It is important to differentiate these two expenses, since the way to counteract them is different. If it is a structure that has high fixed expenses but high direct margin on the products or services offered, an increase in sales volume will surely translate into better results. On the contrary, if the direct expenses are high, the strategy must contemplate another type of approach that allows improving its gross (direct) performance. Something is to see that signatures owners seek to increase the volume of sales of goods that do not generate interesting margins.
Aligned with this, there are many times a range of items that handle several lines of products or business units, which, in turn, have different profitability scales. It is very important to understand the mix of products and consider this point when designing a commercial strategy. The goals should be fixed in relation to the different possible performance graduations, taking into account what is that the business is leaving and what does not, and what generates better results, having as a premise that "selling more is not always selling better." Many firms promote some good or service without evaluating this aspect before, increasing the volume of sale of less profitable products and obtaining a lower profitability than the desired one, returning to the least effective company.
On the other hand, not ceasing to keep in mind that promotions also imply an increase in performance costing. They can be useful to trace the business and increase the net result, but punishes percentage profitability.
As for some of the financial difficulties that occur, it is necessary to analyze that good sales are often generated with good results, but with bad funds. This can happen, for example, due to very extensive deadlines in collections and too short in payments, which translates into little cash At the end of the month. The periods with greater billing imply, in turn, the higher variable costs, generating positive results from the commercial, but with possible negative cash fruits.
Finally, it should also be considered the factor of the generation of high inventories. There must be a "logical" relationship between the immobilized stock and its rotation, to avoid unnecessary losses. For example, despite a good sale, if the accumulated stock is high, the asset is not liquid and consequently the results are not appreciated.
It is vital to consider these points when designing a commercial strategy as appropriate as possible, setting goals based on the most profitable products. Once these, it is important to apply good commercial control boards (Tacos), and use all the tools that allow detecting deviations and act quickly. Then, and based on a good analysis of the available information, commercial actions can be implemented that allow more to leverage the business.
