Have you ever heard anyone say, “If you can’t measure it, you can’t improve it.” Make sense right? Because if you can’t measure something, and know the results of your efforts, then you can’t get better at it.
For example, if the Ghanaian football team didn’t keep track of their wins and loses, how would they know if they are good enough to beat the Nigerian football team? (Sorry guys, can’t take sides on this one!)
In today’s world, technology has made it easier and easier to measure things, whether you’re tracking what you’re eating in order to lose weight, or recording transactions for your business in order to know if you are making a profit.
At the end of the day, people want to know if they are succeeding or not. But, when it comes to succeeding in business, that thing that you need to measure... it’s called a transaction.
Why do you need to record transactions? Let me give 5 good reasons...
1. To not go crazy, Chale
As a business owner or entrepreneur, you are being pulled in 1,000 different directions.
You’re attending to customers, coming up with strategies to beat the competition, trying to improve operations to get things done faster, monitoring cash inflows and outflows, the list goes on and on...
By the time you get to the end of the day, you’re having a hard time remembering what you ate for lunch! So you certainly can’t remember how many MTN scratch cards you sold to Kwabena and how much each card was worth!
Trust me, I’ve been there! I used to go crazy sitting in front of my cash book at the end of the day and trying to write down the details of every transaction. What a headache!
But, if you are recording your transactions on the go, then at the end of the day you can do your calculations and see if the day was a success or not! (or in the case of OZÉ, just check out your dashboard!)
2. To know how much money you are making
Sales! You’re in business to make money right!? Of course you are.
But, if you don’t record transactions, then at the end of each day how do you know how much money you made?
For example, if you only sold a few pairs of shoes, then you can probably calculate your total sales for the day relatively easily. But, if you sold 12 pairs of shoes, 8 belts, 4 shirts, and 16 ties. (We all want to sell a lot right!?) then you might find it hard to remember all the different items you sold and how much you sold them for...
So, record the transaction every time you make a sale and you’ll be able to say to your friend at the end of the day, “Chale, I make 1,500 cedis today. Business is good ooo!”
3. To control cost
Any savvy business owner knows that it’s not just about making sales, but it’s also about controlling cost. And sometimes costs are unexpected!
No matter how savvy a business owner you are, there are some costs that just cannot be planned for...and if you are not recording these expenses, then you won’t know how much sales you need to make that month to cover the costs.
Recording expenses, also serves as valuable information for projecting how much you’ll need to spend in the future.
When you know what expenses are coming in the future, you can manage changes in your business strategically.
4. To know where to spend your marketing cedis
Sometimes you need to spend money to make money. Maybe there’s construction on your street and the customers aren’t coming in like they used to. Or maybe you suddenly have more competitors than before and you need to do something to stand out.
So, you do some marketing. But, how do you know which marketing activities are actually driving sales?
Imagine last week you spent 100 cedis on a facebook ad and saw an increase in sales of 30%. This week, you spent 100 cedis on flyer that you passed out and saw an increase in sales of 15%. Which marketing activity was more effective? The facebook ad right?
If you were not tracking your transactions, how would you know which marketing activity was actually helping you make more money?
5. To identify strengths and weaknesses and grow
Lastly, recording transactions helps you to understand the strengths and weaknesses of your business.
Which products are fastest moving? Which products are high-cost low profit margin? Which marketing activities are the most effective?
And when you measure it, you can improve it. If you know a certain brand of shoe is your fastest moving product, then you know you need to buy more inventory of that show and put that at the front of your shop so people can find it the easiest. If you know that you’re making very little profit on ties, then maybe it’s time to stop selling them.
Data is knowledge and knowledge is power.
So, there you have it, 5 reasons recording transactions is for you.
Looking for a tool to help you record transactions and better understand the health of your business? Check out the #1 trending business app in Ghana: OZÉ.
Prince Arnold Mortagbe leads Customer Success at OZÉ supporting small businesses to use technology to grow their businesses. In the past, Prince worked as the Marketing Director for the Largest book services in West Africa, EPP Books Services, supervising teams across countries. Prince has two first degrees, from the University of Ghana Business School, Harstad University College-Norway and an MBA from Zenith University College.
OZÉ is a mobile platform that helps small business owners in Africa (starting in Ghana) to make data-driven decisions to improve their performance, tap into networks, and access capital. Entrepreneurs can track their sales and expenses, who owes them money and who they owe money to, see their profits on a dashboard, send receipts and invoices, and even access a business coach. Interested? Click here to try it today!