My Sister joined the LuLaRoe movement in late October of 2016. She has done some online/Facebook parties and quite a few pop-up parties.
I have been helping keep track of her expenses, sales, inventory, and filed her taxes. Essentially, I have been performing all of the accounting functions of her business.
Many people may think that bookkeeping is something that you do only for taxes. I say, “Nay, nay.” Bookkeeping shows you the health of your business and can measure the success of your goals. See “How to Eat and Elephant” to learn more about goals.
I reviewed all of the transactions that my sister’s business has recorded and provided some insight for her about how the last 2 months of 2016 are compared to the first 2 months of 2017.
She has had a decrease in the number of items sold by 33%, yet she has had an increase in net profit by 140%.
She asked me why the numbers are so extreme. I told her that there are a couple of reasons:
- She had lots of expenses in 2016 to buy her backdrop, hangers, camera, and other start-up costs.
- She gave a lot of discounts to friends, family, and herself.
- I don’t blame her with how amazing the clothes are!
I provided her a list of Key Performance Indicators (KPI), or benchmarks, that we will use to evaluate her business and help her make the best decisions to grow her empire.
Here are some of the financial metrics we are using:
- $-value of sales
- Pre-COGS Profit
- Post-COGS Profit
- Other Expenses
Here are some of the non-financial metrics we are using:
- # of individual sales
- # of items sold
- Miles driven
- Parties hosted
With the information above we were able to see some trends in the business and project how the rest of the year was looking like. I provided her with a rough tax estimate and reminded her to save at least 20% of her profit for taxes.
So what do you think? Does her progress match what you are seeing?
Do you know where your business stands? You should! I can help make sure you know what to track and how to see it in a way you can understand. Fill out a New Client Form so that we can get started!