5 Reasons You Should Pay More Attention to Your Shopify Numbers
Online shopping is growing fast, becoming the favorite pastime for people all around the world. With access to the world being just one click away, users feel more empowered choosing from a wide variety of goods available.
The surge in the popularity of Shopify is a good indicator of the boom the e-commerce industry faces in recent times. Shopify, an e-commerce platform, is known for offering a wide range of customization services for businesses looking to start their online store, and the importance of Shopify numbers cannot be ignored.
Shopify offers a cloud-based platform for small business owners to showcase their products to the world. Usually, entrepreneurs who are just starting do not have any idea of how online stores work. Shopify makes it easier for small e-commerce business owners to manage their online store better.
If you’re a small business owner looking to expand your scale of operations and profit margins, it is essential to broaden your customer base. Shopify allows you to access markets and audiences all across the global online market.
This access pass is in itself an incentive for business owners on the lookout to start their business on Shopify.
Once these new businesses start their operations on the cloud-based platform, acquiring new customers and meeting the demands of the existing customers are some of the challenges they face. Overcoming these challenges lay the foundation for the success of the business. However, in the process of making a name for the company and gaining the trust of the customers, business owners often tend to ignore the numbers the platform provides them.
All users who are linked with the online platform, one way or another, agree that Shopify regularly provides them with reports and analysis of their performance. A dashboard displaying all your sales during a week or month allows you to observe and evaluate your performance.
Imagine being a part of an online platform where you don’t have to focus on analyzing your performance, keeping a record of your revenue, or bookkeeping. Sounds great, doesn’t it?
However, just as meeting demands and acquiring new customers lays the foundation for the success of a business, not keeping records of your sales figures could result in massive losses for your organization.
Here at Fully Accountable, we have emphasized the importance of bookkeeping and recording the numbers. We have discussed how not doing so can cause the failure of a business.
Although Shopify has a fully automated mechanism to handle your accounts and numbers, it is still important to manage your numbers independently and hire a skilled professional to tackle the figures separately.
To highlight the importance of paying attention to your Shopify numbers, we have compiled a list of reasons why you should pay attention to your Shopify numbers.
Create a Good Accounting System
Entrepreneurs and accountants agree that proper bookkeeping is one of the most crucial aspects of a business. Well-maintained and regularly updated ledgers separate a highly profitable business from a loss bearing one.
Retail owners on Shopify largely depend on the numbers the platform provides them. Although these numbers are essential, they are the tip of the iceberg.
All of us know that business owners want their businesses to grow and expand. Online stores can develop and expand when they offer a new product to their existing customers or tap into a completely new demographic. Successful business owners all around the world agree that a business should commit to a decision only when the implications of the decision are completely known.
The dashboard at Shopify will not tell you the cost of products and capital expenses required in the making of a product. Besides, Shopify will not keep you updated about additional liabilities such as sales tax liabilities.
Tracking the cost of making a product and the return it earns helps in evaluating the performance of the product and how profitable it has been for you. The numbers at Shopify may show you the sales figures for all products. However, having a record of the costs and the related expenses will present a more authentic picture of the product.
A more authentic picture is also what you need when making informed decisions about the business. The numbers you have compiled will help you in making decisions that will enable your business to grow.
Recording day-to-day transactions will help in developing good accounting ethics. Although most of the numbers are easily accessible at Shopify, it is essential to tally these numbers with the accounting details you have recorded separately.
Having a sound accounting system will ensure that the company has sufficient cash flow and profit to keep the business afloat.
Prevent Inaccuracies in Recording Data
Although the numbers on that sophisticated Shopify dashboard are automated, there are likelihoods that the figures presented on the panel may not be correct.
The dashboard allows you to see your sales performance by adjusting the time setting to day, week, and month. However, no matter how sophisticated the data may seem to you there are likelihoods that the data is inaccurate.
The reason for the inaccuracy is that the Shopify dashboard also accounts for the number of canceled orders. It is easy to observe canceled transactions when your business is just starting, as the company is new and there are a minimal amount of sales and cancellations.
However, for an established and growing business keeping a record of cancellations can be challenging. In an established business numerous sales transactions are happening daily with a high amount of cancellation too, there are likelihoods that the dashboard ends up presenting the cancellations also.
Since we have already discussed how feeding the wrong data in a business plan can render the policy ineffective, which is why it is essential to realize the significance of having your accounts maintained.
Maintaining accounts at your end allows you to adjust for all anomalies that can be there in your Shopify numbers.
Boost Your Profitability
In Shopify, it is easy to access data regarding the sales of a good. The platform is designed to provide you with numbers regarding your transactions. It has a full track of what was purchased, the customer who purchased the good and at what price.
It generally gives you loads of information about the sales made. However, there is more to business than just sales. Neither is a high amount of sales the only objective that business likes to achieve nor is it the only information it wishes to attain.
Although the information provided by Shopify is important, it is also important to gain a far better insight into your business because it is essential to record other information too. Knowing just your sales figures will not tell you about the cost of producing the goods sold, nor will it give you information about the profitability of the products sold or the return to the business from the sale of the good.
Profitability is a crucial aspect, questioning the profitability of a business decision or that of a good sold is essential not only for established businesses but also for newly formed young companies. Therefore, to ascertain the profitability of the sales generated it is vital to record all data individually.
Observing and recording all business information helps you in deciding on the product. For instance, pursuing the sale of a product that has high sales but low profitability may not be a good idea. Therefore, if you want to make informed decisions about your products, it is essential to be well aware of the numbers beyond those presented to you by the Shopify dashboard.
Avoid Complexity and Confusion
Shopify has made starting and operating a business more accessible, but not having a proper record of the numbers can lead to unnecessary confusion. Throughout the blog, we have discussed the significance of managing accounting data while operating at Shopify.
We have discussed the operational errors that can occur by not maintaining Shopify numbers. However, confusion, complexity, and unnecessary stress are also results of not compiling accounting data. One such case of difficulty arises when the data presented on Shopify does not reconcile with the one in the bank.
When the sources of information are different but the information provided is similar, there is no cause of concern. However, when our bank statement gives a different reading to the numbers provided at Shopify, it is not only a cause of interest but is also an indication to manage our accounts better.
Most sellers online to tap into a broader customer base tend to provide their users with a variety of options for payment. It is challenging to keep track of all the incoming payments when many options such as (Shopify Payments, Paypal, and Stripe) are provided.
Too many sources of cash payment can cause information overload, and to avoid the confusion that information overload causes it is vital to manage the accounting data. The uncertainty can also be threatening to the existence of a business if it carries on frequently.
Keep a Check on Cash Flow and Inventory
Cash plays an integral role in driving a business forward, together with inventory cash acts as a tool of empowerment for a business. However, if a proper record of the flow of cash is not maintained, then the same device of empowerment can also become a tool of destruction for a business.
For Shopify sellers, both inventory and cash are equally important. The relationship between the two fuels the growth of businesses at Shopify. Cash allows you to purchase stock for sale. The inventory received can then be sold to earn more money.
Although information regarding sales is available on Shopify, information about inventory and the flow of cash is not.
Having a proper record of the cash flow and the cycle of inventory allows you to make crucial decisions regarding the two.
Readily available numbers on inventory help us in determining the status of the stock available. Information about the stock can then be used to determine the levels of inventory needed. The data can also help in signaling an alert when there is little inventory left or when the business is close to losing its entire inventory and eventually the customers.
Therefore, to make crucial decisions regarding your stock and flow of cash; compiling and having access to accounting data is essential.
Recording and taking into consideration accounting numbers can make or break a business. Businesses fail due to many reasons, but not having proper bookkeeping services is a significant contributor to the failure of many companies.
Many retail owners at Shopify do not have the time to manage their accounts. Increasing sales and launching new products already occupy the time of most owners. If owners start observing and recording accounting entries too it can consume precious time and energy; this is why we recommend delegating this responsibility to someone who has the skill of managing them.
We at Fully Accountable provide specialized bookkeeping services to our customers. Our primary goal is to ensure that our customers have ample time on their hands to look after other essential business functions. Therefore, if you are wishing to avoid the hassle of recording numbers and are looking for someone professional to manage them. Contact us 1-877-330-9401 and schedule a strategy call now.