9 Takeaways retailers have to get it right!
by Barbara Crowhurst
Don’t make the same mistakes you made last year. Get it right this year! Barbara shares 9 take aways with you.
Are you thinking, “Is my business on track? I don’t want to make the same mistakes this year.” Don’t worry. You can turn things around. This is the perfect time to work on your business and develop a detailed plan. By taking the time to review last year’s business and making a plan for the upcoming year, you’ll find it much easier to stay on track. Ensuring that you are less likely to repeat the mistakes of the year that has just passed.
Here are the 9 takeaways you must get right this year:
Don't do everything on your own. Retail is a time consuming multi-tasking type of business. With so much to do and little to no help you burn out. At minimum hire one assistant, train this person to deliver great customer service, drive sales in the store and keep the shelves well stocked and run the day-to-day store operations. You can start them part time, increasing their hours as you go. This will free you up to get other things done.
Focus on basic business principals. Reviewing financial reports is fundamental to your business. I recommend the following reports: An Income Statement or a Profit and Loss Statement - shows the revenue, expenses, and the profit/loss of your company for a specific period of time. Look at this report monthly. A Cash-Flow Statement - this report is most important for independent retailers. Cash is king and a very valuable business asset. Look at this report monthly at minimum.
Setting sales targets. When setting targets for the coming year take into consideration what your sales were in the previous year, and set the bar higher. I recommend at least 15%. Take this percentage right thru to your daily sales targets and further to each sale. You have heard me speak on this topic before. Knowing your average sale calculation is important. Show at least one other item when you are working with a customer worth 15% of your average sale. Example: if your average sale is $50, the add on sale item value is $7.50. Also determine how many sales you should be making in a day, week, or month to meet your newly set sales goals. Example: if you calculate this year’s sales target for the week at $4,000 and your average sale is $50 then you need to close 80 sales. Understanding these calculations is vital. You will pay more attention to each customer and each transaction.
Hiring and keeping top employees. Always be on the look out for the next great staff member. Have a clear idea in your mind of the skills and personality traits that will insure the person you hire will be successful. A defined job description for the job of a retail sales associate working in your store will help as well. This ensures that he or she clearly understands the responsibilities while becoming a training outline for you. Interview a number of people, so you have a broader base to choose from. Ask probing questions during the interview. You want to make sure there is a fit. Example: ask a question that shows you their attitude, another question that shows how hungry they are to keep learning and growing, this last idea shows you that they can take responsibility without making excuses. Developing your people, that is your job in the end. More than even money good people want to know they matter and make a difference to you and your business.
Set buying budgets. I have shared the Open to Thrive System with you before. Example: buying budgets are calculated at 55% of your sales total. Budgeting for retail involves balancing incoming funds with outgoing expenditures. As the owner of a retail establishment, you will likely get paid for customer purchases right away by cash, cheque or credit card. A retail budget should coordinate the rhythm of paying for inventory purchases and balancing these payments with incoming revenue. Make sure to include money set aside for new products and opportunities.
Set operating costs and also review those costs in order to try to reduce them. Just recently one of my clients did this exercise and reduced her operating costs by 28%. Your operating costs should not be higher then 40% of sales. Operating costs include every expense incurred by a business that is general, administrative and in support of sales, but not the cost of the product. Although different businesses have different costs associated with them, the main operating expenses of most businesses include; rent, phone and utilities, equipment, fixtures, leasehold improvements, marketing budgets, professional services, payroll, insurance, travel, bank charges, car expenses….
Create a promotional calendar. Promotions are the engine of your business. A promotional plan is needed to set out the year's activities on new products, launches of each season, generally making the consumers aware of your business, services and products, promoting special events, possibly tying into national promos and overall stimulation of sales. I recommend you get this done, if you are having problems let us know. I would love to help you.
Margin overview and understanding how this impacts the business. One vital aspect that I often see entrepreneurs overlook in starting and managing a business is that of gross margin. Gross margin (sales minus direct costs) is what is left over after costs associated directly with the sale of a product or service, such as materials and direct labor, are paid for. This is an extremely important number for every new and small business to manage, as it impacts both the likelihood of reaching breakeven and the amount of profit that is earned. In other words, it directly impacts risk and return. Please look at this report monthly.
Having accurate inventory control. Buying budgets and understanding what products sold well in the past and which ones did not, will go a long way to helping you in this area. While inventory accuracy is the Holy Grail of retail. Here is a must do: identify and move out anything you have had in your store for more than 12 months. Money tied up in dated inventory is an expense you cannot afford.
Upgrading your management style. The success of any business depends heavily on the effectiveness of its managers. Good owners need to make the right decisions and ensure the business is able to take advantage of any opportunities open to them. At the same time, keeping employees happy and motivated in their job. Take an interest in the people working for you while keeping them in the loop. Compliment your staff, it costs nothing. Learn to delegate more effectively. These are learned skills. Keep learning.
It continues to be my pleasure to help you grow your business and stay sane. Please let me know if you need help in any particular area.
Love to hear from you.
ceo retailmakeover and retailmakeover web design services
….helping retailers increase sales and profitability
Barbara Crowhurst is one of North Americas’ Leading Retail Business Coaches and Retail Store Designers. She is also a writer, international speaker and trainer. Her comprehensive and detailed approach to retail comes from years of working in the industry. Her career has taken her from working with some of the largest corporate retailers in North America to consulting with thousands of independent retail specialty stores. Barbara’s company is leading the way with innovative services such as retail business coaching sessions, consulting with her clients by phone/Skype/Face Time or in person. Barbara’s comprehensive Retail Business Makeovers, Retail Makeover University on line and Retail Store Design have become the retail industry’s sensation. In 2010 Barbara with the aid of a team of Web designers and IT specialists launched Retail Makeover Web Design. This part of her company specializing in retail web-design and Internet services.
Barbara has just recently taken on directing the Independent Retail movement in Canada. The focus is to spot light the exploding trend to shop and support local independent retailers. This program has been launched nation wide.
Barbara J Crowhurst
CEO Retail Makeover
North America's Leading Retail Store Designer + Business Coach
Office Line: 905.686.8898
Mobile Line: 416.522.8169
Web Design Services: www.retailmakeoverweb.com