5 Simple Steps to Track Sales for Market Share

One of the most frustrating things in business is needing information that you do not have. And not only is it frustrating, it can hinder growth and facilitate loss. No one has time for a self-imposed loss due to lack of accurate and reliable information, right?! So let’s learn how to easily track sales for market share purposes.

Figures for Market Share

One of the key pieces of information necessary to calculate your market share is your sales. But not just any sales figure will do. We need to know the sales of actual memorials- not accessories, not weird engraving jobs- but the actual sales of memorials your company makes.

So, should you sift through sales reports and manually identify the correct sales?

No!! Please don’t! That is a tremendous waste of time! Use these 5 simple steps instead!

Step 1: Understand Your Income Account

This sounds so overwhelming to someone who doesn’t have a background in accounting. But it is actually very simple! So if it intimidates you, don’t let it.

The income account is where you book all sales throughout the year. It doesn’t matter if it is a photo, date cut or monument- it is all income.

While you are absolutely welcome to use your overall income account while calculating your market share, doing so can offer skewed results. For example, if you sell signage, civic memorials, engraved bricks, etc, you won’t want to include those in your market share calculation.

Why? Because doing so will give you skewed results. Remember, we are using your area’s death rate to calculate the market value. And those types of projects are not recent-death related.

So, to combat this, we use managerial accounting.

What is Managerial Accounting?

Managerial accounting is simply accounting at a more detailed level to better assist in making managerial decisions. That’s it!

So, where basic financial statement accounting will give you total sales, managerial accounting will break down sales of signage, sales of civic memorials, etc. It is an incredible tool to help you gain the necessary data for decision making.

With managerial accounting, the “income account” is a parent account. The parent account may then have several “children”. Just like kids, the “children” can cause both great joy and great heartache. If you know, you know, right?!

Anyway, these “children” are actually called “sub-accounts”. And the balances in these sub-accounts simply roll up into the parent account at the end of the period.

It looks like this:

At the end of the year, the parent account will simply show the sum of all it’s sub-accounts.

Step 2: Consider Your Ideal Sales Sub-Accounts

Every monument business is going to have differing sub-accounts. Why? Because, while we all sell similar products, we have varying product mixes, business models and informational needs.

Understanding Consumer Behavior

As a business owner or manager, it is important to understand your consumer behaviors. And tracking sales by category (ie using the parent/sub-account set up) can help you accomplish that. You can track absolutely any category- big or small. Simply make a list of all the specific categories you sell. For example:

• Custom Shape Single Upright Memorials
• Traditional Shape Single Upright Memorials
• Flat Markers
• Bevel Markers
• On-Site Brick Engraving
• Date Cuts
• Turned Flower Pots
• Taper Flower Pots

Tracking Sales by Materiality

You’ll recall discussing the concept of materiality in this previous post. This concept may also be reasonably applied to identifying sales categories we wish to track.

In the example above, total annual sales is $330,000. It is reasonable to say any category you suspect is making up 5%-10% or more of overall sales should be tracked.

For example:

• Accessories
• Upright Monuments
• Flat and Bevel Markers
• On-Site Engraving
• Flower Pots

You will notice in the sub-accounts set up to track consumer behavior, we have identified detailed categories for tracking. In the example for tracking sales by materiality, we have only identified broad categories for tracking.

Step 3: Set Up Sub-Accounts

So, this step is going to be so incredibly easy if you use Quickbooks Online. Easy…but not fast, mind you.

If you use an accounting software other than Quickbooks Online, you will need to research how this is done, as I have no clue. But I do recommend giving Quickbooks Online a try. If you follow this link you will receive 30% off your subscription for the first six months.

If you already run Quickbooks Online, head over to the menu on the left hand side of the screen and click Transactions and then click on Chart of Accounts.

Chart of Accounts

The chart of accounts is basically a list of every account your company has set up. Once it opens you need to sift through the chart of accounts until you find your primary income account, also called the parent account.

Make sure to note the account number for the parent account you will be using. Then go up to the green button that says New in the top right corner. Click that button and you will be guided to set up a new account.

For the account name be certain to set up something that identifies what goes into the account. For example, if we are creating a sales account to track the sales of accessories, you would name it “Sales- Accessories”.

To number the account, I like to use decimals. So my parent account is account number 400. Therefore, I would number my sub-account as 400.1.

Under account type be certain to select it as an income account and in the detail type select “sales of product income” (unless you are setting it up for a service or something else that is not a sale of product).

Then be certain to click the box that says “Make this a subaccount” and then select the proper parent account.

Finally, in the description area, be certain to list specifically what should be coded to this account. In our example this is “400.1 Sales- Accessories”, so I would need to describe the accessories going into the account. For example “sales of photos, vases, and other items physically attached to the monument”.

Click save, and then you have that part done!

Step 4: Map Your Products/Services

In accounting, mapping is nothing more than telling a transaction where to go every time it is completed. And Quickbooks Online allows you to easily map the sales accounts that your products should go to every time they are sold.

If you do not already have your products and services set up in Quickbooks Online, you need to consider doing that. There are many benefits we will talk about in another post.

It is best to do this methodically.

If you run Quickbooks Online, head over to the gear icon in the top right corner and click it. Then look for Lists and select Products and Services.

After you select Products and Services, an entire list should appear. Hopefully you have your list already organized by SKU number or consistent product naming, as this will make it easier.

In our example we had set up a sales account for accessories. If you only have one product/service that will be mapped to the 400.1 account, then you only need to change that one item. But, if you have multiple products that need to be changed (such as multiple colors/sizes/polishes of an item), then you need to only change one product. (Yes, only change one and read further).

Let’s say we want to map a non-inventory item that is a #1 4.25″x6″ Color Photo. To map it, we will find it in the list and then click Edit out to the far right hand side of the item.

Once you click edit, all you need to do here is fill in information such as the product description and sales price. Then you need to select the income account you set up which, in the example, is 400.1- Sales- Accessories.

Save and Close out to the Products and Services list you started at.

Error Message

Now…you may receive an error message at this point warning you about prior periods. This is because the system is going to reclassify all of your historic sales of this item to the sub-account. This should not have a negative impact on prior periods, as it is still being included in sales. So you can ignore it IF you only changed the income account information.

If you changed anything else, such as the expense account, you need to talk to your bookkeeper or CPA. Regardless, if you do not feel confident about the impact any changes may have on your books, it is wise to always ask your bookkeeper or CPA before continuing.

Changing Multiple Items

To change multiple items at once, look at the Products and Services list. Just above the list, on the right hand side, you will see a box with an up arrow. This is the export button. Simply click it and you can export your entire product and services list to Excel.

Once it is exported to Excel, save it where you can find it. Then find the product you had mapped to account 400.1. In column G you should see the income account listed. If that looks correct, simply copy the account.

Then go through the list and paste that account number for every item you would like to have mapped to the 400.1 Sales- Accessories account.

(As an aside, while doing this it is wise to ensure that all account names, prices, costing, etc is all listed exactly as you want it listed.)

Click save again and then go back to the Products and Services list in Quickbooks Online. Click the down arrow next to the green New button and select “Import”. Then browse to find the file you saved and hit next in the bottom right corner.

A screen will appear asking you to map data. You don’t need to worry with it if you have followed my instructions. At this point, make certain that you click the little box to the bottom left asking you to overwrite existing products & service information. Then click the green Next button and you are done!

This should successfully import all of the data and your items should now be properly mapped in Quickbooks Online.

Step 5: Sync to Stone Spot

If you are running Stone Spot, or any other order management system that syncs to Quickbooks, it is important to make certain that the changes you have made have been synced to the system.

If you are running Stone Spot, you will want to make sure and do a full sync of both inventory and non-inventory/services. This will ensure that any product changes you make, such as name changes and pricing changes, are reflected in Stone Spot as well as in Quickbooks Online.

After performing a sync, I always like to go back in and double check that the changes I made are accurately reflected in both systems.

Now You Are Done!

Now you have successfully mapped your products to the correct income account! If you run an income statement you will see beautifully mapped accounts providing you with the data you need to calculate market share (and make other business decisions). Pretty awesome, right?!

Want to learn how to narrow down and calculate your target market share? Click here!