In business, turnover is one of the important things that must be understood and calculated correctly. This is because turnover is often a reference or benchmark for the success of the business being run.
Turnover can also be influenced by several factors so that it can go up and down. So, you can also do several things to increase turnover.
So, how do you calculate turnover? The following is the explanation. Read until the end, OK?
Turnover is
Turnover is the total amount of revenue a business earns, which comes from the sale of products or services in a certain time period.
The period or time period in question can be calculated daily, monthly or annually. Depends on your wishes as a business owner.
One important thing to remember is that turnover is gross income. So, this amount has not been reduced by payments for expenses or costs incurred for the business.
For example, shop operational costs, employee salaries, building rental, electricity payments, marketing, and cleaning fees.
Turnover plays a very important role in maintaining the survival of a business. Because this is often the main indicator of a business’s financial performance.
If the turnover is high, it means the business is able to sell products or services effectively. However, vice versa.
Factors that Influence Turnover
Actually, there are various factors that can influence turnover. However, here are some of the main factors.
1. Quality of Products or Services Sold
This is a major factor because if the product or service is not of good quality, then it is likely that consumers will only become one-time buyers, meaning they will never buy it again.
This is because consumers are more interested in good quality products or services to fulfill their needs and desires.
2. Service to Customers
If a business provides good service to customers, their loyalty will also increase. This of course can encourage repeat purchases.
Apart from positive interactions with customers, businesses should also resolve problems quickly. Both of these things can improve business reputation so that turnover increases.
3. Level of Competition
If your business is in a market where the level of competition is very competitive, of course turnover can be greatly affected. Prices that are less competitive or product differentiation that does not stand out make it difficult for sales to increase.
It’s different if you sell products or services that have low competition. Sales may be smoother so turnover will be greater.
4. Marketing Strategy
This is still related to the previous point. If your business has high competition, then the marketing strategy you use must be effective.
The aim is to help increase the visibility and sales of the products or services we have.
Examples of several marketing strategies that can be used are social media, online advertising, and word of mouth promotions, which can help attract the interest of potential customers.
5. Economic Changes
Inflation or recession will of course have a big impact on business turnover. To overcome this, you must adapt your strategy to remain relevant and successfully face economic changes.
Also read: 15 Home Businesses That Never Die, From Becoming an Agent to Opening a Coffee Shop
Formula and How to Calculate Turnover
There are several formula options and ways to calculate turnover that you can use, here is the explanation.
1. Simple Turnover Calculation
As mentioned, turnover is income that has not been reduced by costs and expenses that must be paid. So, the simple formula is to calculate the total products sold multiplied by the selling price, namely:
Turnover = Number of Products x Selling Price
An example of a simple turnover calculation is as follows:
Fey’s local shoe shop is able to sell 150 pairs of sneakers for one month in September 2023. The selling price for a pair of shoes is Rp. 450.000. So, the way to calculate turnover is:
= Number of Products x Selling Price
= 150 x 450.000
= 67.500.000
Fey’s local shoe shop turnover in September 2023 is IDR 67,500,000.
2. Calculation of Turnover Percentage
This calculation is used when you want to compare the amount of turnover in one period with another period. The formula is as follows:
Percentage = (End – Beginning) / Beginning x 100%
Example of how to calculate it:
The Aksata watch shop succeeded in selling 200 products in December 2023. Then, in January 2024 the number of watches sold was 250. The unit price of the watch product sold is IDR 300,000.
So, to calculate the turnover percentage, do the following:
= (End – Beginning) / Beginning x 100%
Initial: December sales, namely 200
End: January sales, which are 250
= (250 – 200) / 200 x 100%
= 50 / 200 x 100 %
= 25%
So, the difference between the increase in turnover in December 2023 and January 2024 is 25%.
3. Calculation of Turnover in One Year
As intended, the way to calculate turnover in one year is the same as calculating in a month, but multiplied by 12. The formula is:
Turnover = Number of Products x Selling Price x 12 months
For example, the Sheefa accessory shop managed to sell 150 necklaces in one month. The unit selling price is IDR 150,000. So, the estimated turnover that can be obtained in one year is:
= 150 x IDR 150,000 x 12
= 22.500.000 x 12
= 270.000.000
So, it is estimated that the Sheefa shop’s turnover for selling necklaces in one year is IDR 270,000,000.
Also read: Advertising is an important form of marketing in business. These are the Benefits and Types!
How to Increase Business Turnover
Here are several ways you can always increase business turnover:
- Strengthen branding
- Prioritize product or service quality and innovation
- Optimize marketing strategies
- Provide the best service for consumers
- Maintain good relationships with customers
- Expand market reach
- Run exclusive promotions
- Increase lead quality
- Identify the most effective salespeople
If you are still confused about what steps you should take first to increase your turnover, you can start using the Labamu application.
Join more than 84,000 entrepreneurs in Indonesia who have experienced the growth and ease of running a business with this application.
At Labamu, there is a feature called Offers, which can help customers come back and make transactions diligently by providing various promotions.
There is also an Order Management feature which makes the ordering process faster and more accurate so that customer satisfaction increases.
Downloading the Labamu application on Google Play or the App Store is a smart move to help you improve your business!
