Why has higher sales become more important than higher profits?

Answer is easy, bonuses.   When companies give higher and higher bonuses for higher sales,  they forgot you have to make a profit to pay for the bonus.  Many companies have gone out of business all because they forgot the golden rule.  You have to make a profit.   There are people spending too much in expenses just to help them make higher sales and get a bonus.  Problem is the sales aren't always high enough to cover the added costs.

Bonuses should be based on increase in profits and not sales.   There are a lot of badly run businesses out there that could increase their profits while actually decreasing their sales.

Control expenses and you control your business.  Payroll is one of the biggest expenses any business can have.  A lot of managers cut payroll first because it is the easiest thing to do.  Cutting payroll gives you big cuts fast.  It also can ruin a store.  No employees no sales.  

I suggest before you cut payroll you take a good look at how your spending it..   Do you have the right ratio of sales to man hour.  Do you have the man hours evenly scheduled.  Or do you have more sales associates on on busy times and less when its slow.   Are people standing around with nothing to do?

You need to Question your business all the time.  Plan Plan and Plan some more. 

Fail to plan and your just planning to fail.

Are your managers following up on their associates.  Are they out on the sales floor or in the office?  Do you know what people are doing or are you just waisting payroll?  Do department managers spend more time in meetings than they do making sure the job gets done?  

In a Retail store Money is made on the sales floor, not on the phone or in the office.  Not at meetings and not at the home office.  It happens in your store on the sales floor with customer service. The bottom line is if your cutting payroll you better know which employee hours are expendable and which aren't. 

On Saturday afternoon you don't need a bookkeeper doing sales reports that can wait to Monday.  You need all hands on deck helping customers. 

Have you ever gone into a supermarket and couldn't find anyone to help you after 5pm except a cashier?  Imagine if you did?  what if someone was there to help you find your favorite items.   I imagine more sales.

Think like a Customer and you will know how your Customers think!

How to Increase Retail Store Profits Without Increasing new Customers

Other than increasing retail store sales  by increasing customer flow there are things a good business person can do to increase profits.

Every little bit added together can make a dramatic increase to store profits when sales are not increasing.

1. Increase the gross margin of each sale. That means buying items at a better price and selling them for a higher retail profits. Shop around and get the best deals possible. Look at the bottom line price that includes discounts for cash payments, and shipping costs. These costs adding in can bring margins up or down.
2. Control Shrink. Shrink can bring a store to its knees and force it to close. Control Shrink and watch you store's profits climb.
3. Payroll expenses. Don't tell your employees but payroll is one of the largest expenses any business will have. You must have the right balance in man hours to run a store correctly. Too few and there is no to do the work. Too many and your just wasting money. Salaries need to stay competitive. You get what you pay for. Finding the right people you pay less and train can save much on payroll.
4. Getting the right location is very important. You want the lowest possible rent with the highest possible customer flow. With a unique retail store people may travel anywhere to get to you. If you have an average store you need street traffic to pull people in the door.
5. Other expenses. Keep good records. If you don't know what your spending on things you cant control them. Keep spread sheets with all your expenses. You should have a column for current expense, last years expense and plan budget. Break it down month and year. Constantly review them to see where improvements need to be made. These expenses include everything you spend money on broken down by category. Some expenses include: Travel, insurance, office supplies, cleaning supplies, services, phone, electric, repairs and maintenance, banking, garbage, etc.
6. Good Customer Service. Keeping your current customers spending the same amount is as important as increasing your sales. The last thing any retail store wants is for sales to decrease. Keep your current customers happy and your customer base will increase by word of mouth. Bad Customer Service and watch your sales drop.

You would think at looking at all these things that increasing profits would be hard to do.  But just a little change in each area will increase your profits.

 Every little bit adds up to a sizable increase.  

Here's an example.

Today: Sales $250,000

cost of goods $145,000 = 42% gross margin

Payroll 40,000

Rent 30,000 = 12 months @ $2500

Shrink 5,000 = 2% of sales

Utilities 7,200

Supplies 1,500

maint. 1,500

other 1,000

Profits $18,800

Get better pricing on goods, sell more items per customer, better customer service, cut back on man hours, control shrink, recycle, cut back on off hour lighting, add power saving light bulbs, change to an online phone provider, save on bank fees and supplies, Negotiate lower rent, fix things yourself etc..

Plan : Sales $250,000  ( no increase in sales)

Cost of Goods 137,500 = 45% gross margin

Payroll 39,000

Rent 28,800 = 12 months @ $2400

Shrink 4,500 = 1.8% of sales

Utilities 6,000

Supplies 1,200

Maintenance 1,200

other 1,500

Profits $30,300 = 61% increase

Increase Sales by 4% or $10,000 and Profits go up to $34,800. Its important to note that these numbers aren't real and yours will be different. But it shows how with a little effect in all areas of business you can make a big difference to the bottom line.