Having a retail store is not easy especially in Vancouver. With increased property taxes hurting small businesses combined with the increase in online shopping, retailers need to stay savvy to survive the challenges they face.
Most people shy away from knowing their numbers but given that we are bookkeepers (aka number nerds) we get a first-hand picture of the numbers and they clearly show what works and what doesn’t work.
Here are our top 5 tips for making your retail store more profitable.
1. Invest In A FANTASTIC POS Machine
We aren’t just saying this because we love numbers. Investing in a great system such as Lightspeed will allow you to monitor and understand your cost of goods sold (COGS) so you can discover what’s selling and what isn’t selling,
Additionally, you want to pick a good software that links directly to Quickbooks so you can save yourself a time and money when organizing your bookkeeping.
2. Become Focused With Your Advertising
Not everything in your store is going to be popular and sell. By having a strong POS system you can determine what your customers want and what they don’t want. Dedicate more shelf space to your top selling items and discontinue slow-moving inventory. Don’t be afraid to raise the price on your popular items, just make sure you stay competitive while doing so.
This is going to lead to my next point.
3. Limit discounts!
Discounts take from your profits so be smart about what you discount. Social media is filled with people promoting discounts and giveaways. Sometimes they make sense but you need to be strategic about your promotions. Over-promoting discounts and discounting items too regularly can teach people to wait until you have a sale to come in and purchase.
Put a promotions schedule in place and stick to it. Use it to move items that aren’t selling and show customer appreciation for your popular items. Bundling items can also be a good method to provide value without robbing yourself. But unless you are a major retailer or a have money to burn resist storewide sales and not having a strong promotions plan in place.
4. Know Your Numbers
“But mooommmmmmm I hate math” Too bad dear it’s for your own good!!! You NEED to know and understand your fixed vs variable costs so that you can make sure your profit margins are correct and enough to cover the cost of operating your business. Additionally, knowing this numbers will allow you to create a monthly cash flow budget to ensure that you have enough $$ to purchase inventory. It will also allow you to make savvy decisions when it comes to your vendors such as asking for bulk discounts and reducing the number of vendors you have.
If this all seems a bit much then hire a bookkeeper. If you are trying to cut costs then wash your own windows. Don’t skimp out on good bookkeeping and accounting. It could mean the difference between success and failure.
5. Be Smart With Your Employees
Who you hire could make or break you. If you don’t have great staff customers won’t come back. Spend the time finding the right people and then invest in educating them on how to SELL if they don’t already come with the knowledge.
Also, remember that at the end of the day you are the boss and if you don’t run a tight ship everyone is out of a job. So only schedule employees when you need them. Create a schedule that works for you and your store with the top sellers getting the most hours.
Know your store’s conversion rate (how many customers enter the store compared to how many that buy things) then determine how you can improve the numbers. If you determine it’s a staff-related issue then address it immediately.
Running a retail business is never easy. Gone are the days when a storefront was enough and rent was low. Juggling online business as well as your store is challenging but if done well can also be very rewarding and set you up for a bright future.
If you need help understanding your numbers contact us today!