How do I Calculate the Percentage of Growth in Sales?
Due to the great acceptance that has had the entry of “How do I calculate a percentage of sales compliance?” I have noticed that this type of post is very helpful for those people who want to start implementing a series of indicators that will help them to measure the performance of their business.
For the above, and very similar to the issue of compliance, I will explain how to calculate a growth in sales compared to the period you need to do it, and it is precisely here where we must take special care.
Whenever you are going to measure a growth in sales it is important to always take equal periods of time or events and seasons of the same orientation to compare them, for example:
The current month versus last month
The current month against the same month of the previous year.
The current week versus last week
One week of this year against the same week of the previous year.
Today against yesterday.
Today against the same day of last week.
One season against another in the same segment (Christmas, Back to School, Halloween)
One year against another year.
Otherwise you will get a result totally deviated or to which another interpretation would have to be given, when for example you compare the sales of a chain of stores in the year 2016 against the sales of the year 2017, but the number of stores is not equal since during The last period has opened more stores, unless you separate the sale of these new stores to observe the real growth.
What do you get as a result of this comparison between the two sales figures?
The percentage of growth in sales, which tells you what percentage the period or activity you are measuring has increased or decreased, this result is the starting point to analyze the negative or positive behavior of the management you are doing and about which you can deepen to the level of detail that seems appropriate.
You can detail these growth percentages in the levels that you need, like this:
By Departments (Fashion, Grocery, Home, etc.)
By Sections of merchandise (Meats, Toys, Stationery, Babies, etc.)
By Product category (Vegetables, Notebooks, Televisions, Shampoos, etc.)
In the category of Televisions, you could look at the behavior of LCD, LED or by sizes 20″, 32″, 40″.
At the moment of calculating , you will need two numbers, the sales amount you want to measure vs the amount you want to compare. So, how is the formula?
You have to keep in mind that always the most recent value is the one that goes to the numerator and the oldest will go as the denominator, to that result you subtract one unit and multiply it by 100.
((Recent Value / Previous Value) – 1) x 100
Let’s move on to the examples to see some of the alternatives that the results will show us:
A Pharmacy sold in the month of March 2017 the sum of USD$ 35,456 and in the same month of 2016, its sale was USD$ 30,895 what was its percentage of growth in that month?
(35,456 / 30,895) = 1.147 – 1 = 0.147 x 100 = 14.7%
A Bakery sold in the month of January 2017 the amount of USD$ 16,508 and in February of the same year USD$ 15,330 what behavior did their sales show?
(15,330 / 16,508) = 0.9286 – 1 = – 0.0713 x 100 = – 7.13%
From the previous exercise, we must highlight 2 points, first we are analyzing the behavior in sales from one month to another, among other things like identifying what is the business trend, and second, we cannot trust 100% of this result because we are comparing a month of 31 days against a month of 28, the real trend could be observed in two ways:
Taking out the daily sales average for January and February, then do the calculation we have seen before.
Take 28 comparable January days with 28 days in February, that is, the same number on Monday, Tuesday, Wednesday, etc.
To finish, under this same logic, you can calculate the growth in the production of a product, in the utility of a business, the population of a city, a country, etc.