CategorySmall retail business management advice

Hi, my name is Mark Fletcher. While here at Tower Systems we make POS software for local small business retailers, I also provide support advice to retailers. I was asked to write an article recently for a small business retail publication. Thinking about a shop I had visited recently and how the performance of the business did not match what the owner thought, I decided to write about how a busy shop can lie to you. Here is the article:

Do you get to the end of the day exhausted from how busy the shop was and feel good about the business? When I bought my first shop, I loved being exhausted by the end of the day. I thought being busy equalled success.

The thing is, a busy shop handling many low-value, low-margin transactions in a day is likely to exhaust you more than a far quieter shop handling fewer transactions at a higher value and with a higher margin.

Now, for simplicity, when I talk about margin here, I am talking about gross profit. This is what you sell an item for, less the cost of the item to your business.

The most important truth about the performance of any business is in the profit and loss statement. This is where everything comes together. On one side is all your sales revenue. On the other side is the cost of stock purchased, along with all other costs such as labour, rent and overheads.

Set yourself up to get easy access to your profit and loss statement yourself without needing to go through an accountant. This is easy to do, especially if your point-of-sale software feeds sales data and inventory purchase invoices direct to the accounting software. Being on top of performance has never been easier.

If your business features low-margin, low-transaction value products, look at opportunities to increase margin on those products and sell more higher price point items with better margins.

The price you charge should reflect what you offer. If your business is convenient, shoppers are likely to be comfortable with a higher price than they may pay elsewhere. If you offer a value-addition, such as differentiating product knowledge or follow-up servicing, this should be considered when setting pricing.

On initial consideration, this may feel too difficult to achieve. I have seen retailers think this, only to realise that they were the barriers to deciding what might work in their shop.

A while back, I was helping a retail business that was rooted in that low transaction value, low margin world. I suggested they add a product category their type of business was not known for. They did, and it was a success. Today, that initial change has led to a complete business transformation, delivering a much-appreciated profit multiple that they could not have achieved had they not changed.

In retail today, there are no rules demanding your business stay in a lane defined by the shingle above your door. By disrupting expectations for your type of business, you can create more success for you and all who rely on the business.

Don’t be duped by your business. Feeling tired is no measure of success. The only measure that matters is the one reflected in the financial statements of the business.

Hi, my name is Mark Fletcher, managing Director of Tower Systems. We make POS software for small business retailers. Today I share with you a story about local small business retail and someone I met with plenty of times. I hope you find it helpful. here’s the story:

Alan had worked in his dad’s thriving shop in Sydney for 25 years and had pretty much run things for the last 10 years. He had spent more than half his time in recent years looking at changes they could make to enhance the relevance of the business. He went to retail conferences and trade shows. He took meetings in the shop with people who could help.

I met Alan at conferences and in the shop. Each time he was full of questions about retail trends that relate to his type of business and ideas he could implement.

I loved talking with him because Alan loved talking retail. He had excellent insights and some terrific ideas for transforming the family business.

When the shop lease came up for renewal a couple of years ago, they did not take the option to renew. Even though the business was successful, and Alan had a kit full of ideas on how to navigate changes to their type of business, they gave up and walked away.

Alan never implemented any of his ideas. It turned out he liked to think and talk about change. He and his family closed a shop doing more than $1.5 million a year in product sales.

When it came time to commit, they decided they did not have the energy to engage in change.

They’d overthought change, considered too many options, created an out-of-control project, and all the while not implemented even the simplest of changes in the shop.

There is a saying in the start-up world: Launch early and launch often.

Some repeat a related saying: Fail often.

It is the fear of failure that can get in the way of even the simplest of changes being implemented. I think that is what blocked Alan and his family. They were stuck on a treadmill that went nowhere.

If you know you need to make changes in your business, start. That’s it, start. Do something. Take a step forward. Make a change. No matter how small, it’s a start, and that’s what matters. That action fights back against any fear of failure or other hesitancy.

If you have more ideas beyond one small and simple change, embrace and implement them. The act of making changes will help you develop your plan.

In some retail settings, it is the regular small changes that bring shoppers back. They know that something will be different each time they visit.

Small changes are manageable, often affordable, and measurable.

Big changes can feel daunting and be expensive and, therefore, riskier.

Personally, I like do-it-yourself changes, things we can do in the shop without bringing in an expert.

Alan and his family made good money from their successful business over many years. Had they acted years before the lease renewal on some of the changes Alan had developed, they would have had a business to sell.

Next time you are at a conference or trade show, look for the two or three easy things you can implement at a low cost that have the opportunity of a good reward.

Our purpose is to empower local retailers to thrive. Sometimes, that can be challenging when the retailer does not agree with the path indicated in their business data.

It’s true that if you are unhappy with how your business is performing then change is the only option for if you keep doing the same thing, you will experience the same results. In this short video from a few months ago our CEO explores this topic from a range of perspectives.

Tower Systems is a small business focussed POS software company developing, and supporting POS software for niche specialty retailers.

While our Tower Systems POS software for small business retail has stocktake facilities to enable fast and accurate counting of inventory, it really is necessary for businesses to do them at the end of the financial year. The better approach is to:

• Track all inventory arriving in the business at the point of arrival.
• Track all sales, at the point of sale.
• Track all returns at the point of return.
• Spot stocktake parts of the business to get a read on theft.

These things alone, done with consistency and accuracy will provide the business with a stock listing, what you’d usually get from a stocktake, that is accurate for your financials and accurate for your taxation return purposes.

By having a consistent approach to stock management at all appropriate gate points in the business and doing this work daily on stock movements, you negate the need for end of financial year work. This saves time, labour cost and results, actually, in more accurate business data.

Stocktakers, of course, will criticise this as this post makes the point that they are not necessary. the thing is, their manual processes, have been found to be inaccurate and, often, inappropriate.

For those who do want to do a stocktake, we make stocktake easy.

No, we are not talking about cutting corners or avoiding important and vital work for the business. Rather, we have a stocktake process that could save you time and help you know what you need to know today.

While doing a stocktake of the whole business is the traditional way, if you break it up and do sections of the shop when it suits, you could, through a rolling stocktake process, have more accurate data with a lower labour cost for the counting of stock.

The Tower Systems POS software lets you do part of the shop if you wish. That could be a shelf, an aisle, a section of the shop or even a single item. Of course, you can do a stocktake for the whole store too.

By doing a stocktake of a section or segment of the business, you can concentrate on high moving items, items more likely to be stolen or for some other reason. You can also schedule these sectional / spot stocktakes in a way that suits your labour availability. Finding half an hour to do a section in a daily roster could save the business money compared to bring people in especially to stocktake.

Having worked with 3,500+ local retail businesses for many years and participated in many stocktakes across a variety of product categories, our advice is that the rolling stocktake approach is usually more time efficient and financially beneficial to a business. This approach does provide you an earlier indication of possible theft challenges.

Good POS software gives you stocktake flexibility and this helps you drive value for your business.

Now, some quick fire stocktake questions, which we answer from the perspective of the Tower Systems software.

Can my shop be open while I stocktake? Yes.
Can I stop and start the stocktake? Yes.
Can I use multiple terminals to stocktake? Yes.
Can I use a hand help PDE or PDA? Yes, many brands are supported.
Can I use a laptop? Yes.
How long will it take? It all depends on your products, store layout and staff training. Time improves as they go usually.
How often should I do a stocktake? Once a year for the whole business or weekly in manageable time bites if doing the rolling approach.
Will you train us? Yes, we have excellent self-serve and one-on-one training resources and options.

Our advice to local small business retailers about stocktake is ditch the end of financial year grind, manage stock better through the year and you will make better business decisions through the year as a result.

Whether it’s a natural disaster or not, businesses can be challenged by events that are outside the direct control of the business owners and managers. The key to successfully handling such events is the planning in place beforehand.

No one wants to plan for disaster, most don’t. Those who have encountered disaster, large or small, tend to wish they had better planned for it.

This advice is far-reaching, designed to act as a broad list of steps you can undertake to be prepared, or to at least get you thinking about steps you could take. Do it all or some, but do something … otherwise when you need good planning you will not have a plan on which to fall back.

Disaster Planning

Here are some general suggestions on planning for a disaster in your business property.

1. Create action plans for different events so that those working in the business know exactly what to do. here are some examples of such events:
   1. Power blackout.
   2. Payments (EFTPOS) outage.
   3. Flooding or water ingress impacting the shop.
   4. Police incident directly impacting access to the shop.
   5. Serious health situation by a customer in the shop.
   6. Attack by customer against the business on social media.
   7. Loud complaint by customer in-store impacting other customers.
   8. refusal to supply by a regular supplier.
2. Keep in one secure place off-site copies of: Business contracts and agreements; employee contact details, business account and other passwords, insurance details, recent photographs of fixtures, fittings and stock.
3. For records you cannot easily copy or that may change as the trading day unfurls, consider having a go bag ready for you to grab if there is a risk to the premises such as a bushfire.
4. Maintain a register of all employees in the business premises at any time.
5. Prepare and place in a prominent place an evacuation plan.
6. Maintain a professional grade OH&S compliant first aid kit. Have this checked regularly.
7. Regularly maintain all fire extinguishers – check with your local fire brigade about this.
8. Ensure that the business premises is safe and maintained to the local building codes and OH&S regulations.
9. Have a trained first aid officer on staff. Your local St Johns or similar will be able to provide training.
10. Use government resources, there are plenty at state and federal levels.

Insurance Protection

Insurance coverage is vital to helping a retail business overcome any type of disaster.  In addition to ensuring that your insurance policy covers all disaster situations of concern to you, including flood, theft, water inundation, fire, earthquake, riot—be sure to carefully read the policy, ensure that your insurance policy / policies cover payouts for the following:

1. ‪Business interruption.  The amount should equal your anticipated gross profit for whatever period you choose to be covered.
2. Data recovery.  Including the hiring of experts to recover data from backup sources or the manual entry of data which cannot be automatically recovered.  It needs to ensure that you are covered to the point of recovered data being useable in transacting business.
3. Lost stock.  This is stock stolen, lost from the business.
4. Damaged and unsaleable stock.  This is stock which is water damaged, scuffed or dented and which will not attract full price.
5. Dated stock.  This is stock that you cannot sell by the due date.
6. Many policies require explicit statement of glass coverage.
7. Temporary trading premises.  Business interruption may cover this.  Ensure that it is explicitly stated.
8. Key person injury and/or death. This will usually be a separate policy.  Depending on the disaster, coverage may also be available through the overall business policy.

Ensure that the value of stock, fixtures and fittings covered by your policy is an accurate reflection of the real value of these items.  Talk with your insurance company about the best approach to track this on an ongoing basis.

Insurance brokers can provide access to assessors who can advise on the appropriate level of insurance for your situation.

Use your Point of  Sale system to track all stock movements in and out.  The stock on hand in  your software should be your coverage.

Ensure that your insurance policy protects for the seasonal nature of your business

Data Protection

Business data is one of the most valuable assets of the business.  Like insurance, the value is often not understood until you need what you do not have.  Retailers who are serious about protecting their business data in the event of any disaster follow these steps:

1. ‪Backup your business data every day, at the end of the day, without fail. Use a cloud based backup service that undertakes the backup as the day unfolds without you having to every do anything to cause a backup to be taken.
2. Maintain a separate backup for each day of the week.  Consider a separate backup for the last day of each month.
3. Remove the backup medium, usually a USB stick, from the business premises each day – outside the business property.
4. Store the backup in a safe, dry place.
5. Check the usefulness of the backup by restoring and checking the data.
6. Store original business software in a safe off-site location.
7. Check the backup every three to six months – to make sure the backup is actually backing us current data and can be read. A backup you cannot read is a waste of time and money.
8. Change your passwords regularly.
9. Do not share passwords widely.

Disaster planning is important. When you need it the most is when you face a disaster. Don’t be a business owner who realises that only then.

The new retail concept by Australia Post opened in Orange this week and a colleague got to see it first-hand.