Do what it Takes to Improve Sales and Profits

Posted: October 28, 2024
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Category: Spotlight on Business

While the inflation rate is steadily dropping, the cost of goods continues to rise. Store owners must tilt the scales in their favor to remain profitable. Success depends on being creative and leveraging new opportunities or revisiting ideas that may have been shelved previously. Sometimes, business fails to implement change because it’s a matter of timing, limited resources, or lack of planning—but it’s always a good idea to examine processes that can grow profits, improve productivity, and facilitate long-term growth. These suggestions can help your small or mid-size business profitably during economic uncertainty.

Stock up on Impulse Items
Impulse Buys are essential for boosting retail sales. They’re significant as retailers struggle to generate profits when confronted with price-sensitive shoppers. It’s also a stressful time for some Americans. Many consumers elevate their mood by making spontaneous, last-minute purchases before they exit physical stores or checkout virtually online. It’s up to retailers to create environments that make it quick and easy for shoppers to see impulse items, assess their desirability or usefulness, and close the transaction with a purchase. Place merchandise on the path to the checkout counter, and endcaps are ideal locations. Adding colorful signage and callouts will draw attention to specific products when the treatments are used selectively.

Specialize in locally sourced niche products
“Shop Local” has become a rallying cry for many consumers. Many small retailers depend on the patronage of their local communities to stay in business. Partnering with other companies to sell their locally produced specialty products is a win-win for each business and the community. These goods may cost you and your customers slightly more than you currently pay. However, studies indicate consumers are willing to pay higher prices for unique, specialty products. Creating a niche business that caters to select customers differentiates your operation from competitors and broadens the appeal of your product offerings.

Invest in Great Employees
Retailers know how tough it is to hire and retain a good employee. Just as owners invest in inventory, facilities, and equipment—investing in employees increases the value of the business. They are the front-line face of the company and the people who build relationships with your customers through positive interactions. In addition to salary, there are other inexpensive ways to keep employees motivated and loyal. Surveys indicate that one of the things motivated employees want is job training and the opportunity to grow.

Most wholesalers and industry organizations offer retailers free or low-cost access to employee training programs. Training is also offered through community colleges. Be sure to cross-train employees to ensure they are continuously learning and contributing fresh ideas to the organization. Like owners, employees should also spend their time wisely and invest in activities that increase the company’s profitability.

Automate Essential Functions
While many business owners consider themselves to be a “jack or jill of all trades,” trying to manage all of the essential functions in the operation can be overwhelming. The retailer’s primary focus should be initiating significant activities such as optimizing procurement costs, managing customer relationships, following trends, and responding to market demands. The best way to free up time to focus on these activities is to automate time-consuming essential functions such as payroll, invoicing, and scheduling. Automated software and online programs are necessary to operate a business efficiently.

Manage Inventory and Procurement Costs
When it comes to being profitable, one of the most critical factors in purchasing and managing inventory is Knowing the cost of carrying inventory until it’s sold, which is a fundamental rule of business. Too much inventory can tie up working capital or lead to markdowns on the slow-moving stock. Typical carrying costs range from 20 percent to 30 percent of inventory value and increase the longer it takes for the product to sell. The goal is to reduce inventory costs by keeping less inventory on hand by buying out of the wholesaler warehouse or directly from vendors.

  • Stock seasonal and specialty merchandise that is in demand by customers
  • Sell more products with high-profit margins—house brands, dealer specials, paint, and sundries
  • Work closely with key vendors to get the best prices and track price increases

Be Willing to Change Direction
Entrepreneurs go into business to make money and be profitable. When that isn’t happening, it’s time to develop a new plan to turn the situation around. Look at the business holistically and eliminate waste. Leverage your most valuable assets—your customers and employees. Seek to improve the business by incorporating fresh ideas from industry experts and peers in your network.

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