Tracking Business Website Financial Results
As part of planning your business website, talk to your bookkeeper or accountant about financial implications and tracking. Although this conversation is obviously critical for a site that sells online, it’s equally important for tracking costs on a nonsales site. Unless you have a small, strictly informational site, ask your accountant to
Set up your website as a separate job in your accounting software. You can then track costs (and revenue, if appropriate) attributable to the site. In other words, operate your site financially as though you’re opening a new, bricks-and-mortar location and need to know how it performs. Your website is, indeed, a new cost center and — with some hard work and luck — a new profit center.
Segregate online advertising expenses from other marketing and advertising costs in a unique cost category. If you sell online, separate online shipping and handling costs from offline shipping and from product revenue. Track whether you’re losing money on shipping, one of the most common problems e-tailers (retail businesses that sell online) have.
Decide how to allocate labor, benefits, and overhead costs to your website. Although cost of goods might be obvious, cost of sales is not.
Determine how development costs will be amortized over a specified time frame. If you’re having trouble calculating your return on investment (ROI), remember that bookkeepers and accountants compute this amount for their entertainment.
Become familiar with your site goals and objectives, help measure financial results, and prepare a custom report monthly or quarterly. Request more frequent reports as revenue rises or if you need more detailed tracking.
Review your web and store statistics software to see which data should be fed into the accounting system. If you already have an integrated inventory, point-of-sale (POS), and accounting system, this task might be semiautomatic.
Your financial reports are worth the effort only if you use them. Watch your profit number like a hawk to ensure that your projections are on track — or as an early warning sign that revenues and expenses are getting out of hand. Act as soon as you identify a problem, because it won’t solve itself.
Now, and only now, are you ready to use web analytics to improve your marketing and your website.