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Keeping Up on Your Record Keeping
How to establish a plan to get—and keep—your business organized
by Dennis L. Prince - Apr 06, 2010
It has been said that a clean desk is a sign of a sick mind, yet the online seller who's well organized is definitely working in a healthier business situation. While it's true that a seller's key focus points should be on matters of proper pricing, impressive images and compelling item descriptions, that doesn't imply that good record-keeping should be neglected along the way.
Indeed, the organized seller that dutifully tracks online sales, bidder and buyer information, and everything else that comes with running a business is the one best poised for sustained success.
If the thought of record keeping causes you to shudder, take heart knowing that an established plan will save you countless hours, and likely result in improved business results. Read on to learn how easy and effective a renewed record-keeping method will help boost your business.
You have to start with a plan
It seems everyone has different ideas about the best way to organize records but, by and large, the most successful sellers do adhere to some key approaches. While there is no one "right way" to manage your business data, try to incorporate these key record-keeping strategies:
•Adopt a method that's easy to use and reliably repeatable. An approach that isn't too time consuming, and won't be constantly changing, helps you develop a rhythm to the work, and can be counted on for accurate and complete results at each point when you assess your activity. This applies to high-volume as well as low-volume selling.
•Be sure your method is efficient to the degree that you won't be tempted to abandon it in the near future. Record-keeping methods can be enhanced, but, again, if you find yourself changing over to a new style every other month, you may have developed something too complex.
•Keep it as simple as possible. You don't have to preserve every single bit of data. Decide on the most pertinent information that will serve you for one year's time and go with that.
Of course, there are many tools to help you manage your online sales records. Some use the simplest of paper-based approaches while others prefer computer-based spreadsheets or database applications. You can investigate Web-based Business Management Systems or even purchase third-party software packages. Research them all to determine which is best for you and which could easily grow with you as your business grows.
Whichever means and tool set you settle upon, be sure you're comfortable with it and confident in using it. Then, be sure you have the proper storage facilities for such records (physical or electronic), and that you have some sort of backup or recovery method in case the unforeseen occurs.
So, what are the records you'll most likely need?
“Less-organized sellers spend too much of their business time digging for poorly stored or maintained business records”
The most-common question asked by sellers is, "What records should I keep?" Though this list isn't all-inclusive, here are the sorts of information that will serve you well, today as well as months and years down the road:
•Keep a detailed listing of your inventory, when you acquired it, the price you paid for each item and the price at which you sold each item. This is the sort of income-tax information every business needs to report, but ask your tax consultant if there are additional pieces of information you should keep.
•Keep detailed information of your cost of sales, including cost incurred when you acquired the inventory, cost associated with putting the items up for sale (including auction venue listing fees), and cost you incurred at the actual point of making a sale (e.g., transaction and payment-processing fees, etc.).
•Keep a record of the method of payment you received in each transaction. This is especially helpful in determining if certain methods are used most often, and if those methods translate in to more sales or higher income when providing that option to buyers.
•Keep a record of buyers' names and other contact information. This is important for customer service matters, including follow-up communication as well as notifying of new items that might interest a buyer.
•Keep a record of shipping methods you utilized for each transaction, plus any tracking numbers, to ensure each item arrives safely to its buyer.
Surely, you'll be thinking of additional information that would be useful to your business, but the above information will suffice for the purposes of income-tax reporting, customer/client relations and follow-up in case a transaction needs to be revisited for any reason. The usual litmus test for record keeping is that it should include information that can be useful and reliable for at least a 24-month period.
Smart record-keeping saves time
Some less-organized sellers reluctantly confess they spend too much of their business time digging for poorly stored or maintained business records. That time is lost opportunity, plain and simple. Avoid this by establishing a filing plan, be it hardcopy or electronic and sticking to it faithfully. If you implement a plan that utilizes clearly and consistently marked files, you can store and retrieve information in mere seconds. Moreover, your ability to quickly retrieve transaction data allows you to respond quickly to a buyer who has a question about a current or previous transaction.
For your eyes only
Just a quick note about controlling your sales data: Be sure you have exclusive access to your sales records—meaning there isn't someone else in the work area (office or household) who might, unwittingly, reorganize or otherwise disrupt your record-keeping system. If you work with a business partner, be sure you both agree to the record-keeping methods and agree to communicate whenever a change or enhancement might be useful.
There's no shame in revising a record-keeping strategy. In fact, healthy businesses find benefit in continually improving their processes. Whether you work alone or with others, be sure to establish a sound record-keeping plan and be able to modify it as your business requires.
Dennis L. Prince has been analyzing and advocating the e-commerce sector since 1996. He has published more than a dozen books on the subject, including How to Sell Anything on eBay...and Make a Fortune, 2nd Ed. (McGraw-Hill, 2006) and How to Make Money with MySpace (McGraw-Hill, 2008). His insight is actively sought within online, magazine, television, and radio venues.
Opinions expressed here may not be shared by Auctiva Corp. and/or its principals.