We hear retailers saying that times are tough, that business is tough, that the economy is difficult.
While complaints are easy, acting is harder. Our view is that everyone in small business has to act to the conditions. If times are tough, get tougher, smarter and faster is pursuing better times.
This is why one piece of advice we give to small business retailers is that they/you should make every day your pay day.
Today, the best way to extract value from our businesses is to make every day your pay day, to not rely on your pay day being the day you sell the business. The days of a retail business selling for a handsome multiple of net earnings are over for now. Making money when you sell is not and common. hence, the needs to make money today. What you make reflects in your P&L.
The P&L matters as this is what you need to be guided by in all business decisions and actions.
The challenge is how do you do this?
Retailers need to look at their businesses differently. This starts with the mindset of every day being your pay day. Each decision needs to be considered in this context, in the context of the P&L impact.
Focusing on profit today will give you a better result today and make your business more valuable tomorrow.
Here are some suggestions for making every day your pay day:
- Run with the leanest roster possible. Just about every retail business we review has capacity to lower labour costs. In a typical retail business, one hour saved today is worth around $75 in revenue.
- Ensure you can sell when the business is closed. Yes, this means sell online.
- Promote the business outside your usual foot traffic area … increase your customer base.
- Promote your business outside the brand people know you as. or example, online pitch under a brand other than your brand.
- Have your best people working the floor, helping customers spend more.
- Have stunning displays that attract people from outside the shop.
- Have compelling displays in-store that encourage people to browse beyond their destination purchase.
- Always have impulse offers at high traffic locations.
- Charge more every time you can. Loyalty programs such as discount vouchers, bundling into hampers, multi buys such as 2 for 3 and other opportunities enable you to do this by blocking price comparison.
- Buy as best you can.
- Grab settlement discounts every time you are able.
- Measure product category performance by gross profit. Quit the categories that are not paying for themselves.
- Promote outside your store using online and social media opportunities.
- Leverage adjacency information. Chase a deeper basket – people purchasing more each visit.
Be responsible for the profitability of your business. Don’t blame your suppliers, your landlord, your employees or some other external factor … it all comes down to you – the decisions you make and the actions you take.
If you relentlessly pursue profit with a clear focus you are likely to see profit grow. That’s better than waiting to make money when you sell because that’s less likely to happen in this market.
Doing all this relies on your measuring the performance of your business. The Tower software helps with this. It is easy.