5 Low Cost Things You Can Do Now That Will Increase Sales!

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FREE SMALL BUSINESS ADVICE !
 

5 Low Cost Things You Can Do Now That Will Increase Sales!

1. Clean up the store 

• Get garbage off the floor, if your merchandising keep  it neat.
• Ladders and carts not being used should be put away.
• Floors should be  swept and washed.
• Shelves are straightened.

2. Re-merchandise the shelves.

•  Customers like it always looking fresh and new.  Move sections from one place to another. Pull them forward, make it look full neat and new.
• Customers will see items they didn't notice before. 
• Customers will stop shopping a store if they feel its going to have the same old thing. 

3. Use in store signs.

• Show the value to the customer even if its the everyday price.
• Just pointing it out pushes sales.

4. Good Customer Service.

• Be friendly and helpful, not pushy and annoying.

5. Get the word out

• Word of mouth is the best and cheapest advertising. 
• Have a good logo and make it visible outside your store.
• Use free website and social media.


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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.

Ways to Increase Retail Store Profits.

Follow @Kogward Simply putting a little effort in each of the following areas will bring back big increases in your bottom line.  Focus on all areas, giving a little extra to those that are tougher for you.

1. Increase you customer count.  Easiest way to increase profits is to increase sales.  There are lots of  ways to get more customers into your store.
2. Increase your ave transaction.  Increasing the amount each customer spends in your store takes really good sales and customer service skills.  You don't need any advertising although good signage and merchandise presentation helps. 
3. Decreasing Expenses.  I think this speaks for itself.  Keep good records, knowing what your spending is the first step in controlling it.  Reduce Shrink!
4. Increasing Gross Margin.  Margin is the amount of money you make before expenses.  Or simply put Gross Margin = Sales - cost of goods.    If you buy a book for $1.00 and Sell it for $2.00 then gross margin would be $1.00 or 50% of every dollar.   Now find items that cost you less and sell them so you can make more than 50% . 

Here's an example:

100 customers spending $8.00 each = Daily Sales of $800  , $5600 a week,  $291,200 a year
margin 50% = $145,600 - expenses of $70,600 = $75,000 Profit .

Increase 10 more customers per day spending $1 more = daily sales of $990.  or $373,550 yearly sales.
increase margin by 2 cents on the dollar or 52% and decrease expenses by less than $15 a day to $65,610.  Total Profit is now $122,000 an increase of $47,000 or 62%.

You can easily see that doing a little can compound into a big profit increase on your bottom line.

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Retail 101: What is Shrink and How Does It Affect Me?

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First a few definitions you need to know.

The definition of Shrink: refers to anything that can affect your bottom line and reduce, or "shrink" your profits.   Examples are, theft, paperwork mistakes, and product damages.  Bottom Line:  refers to the last line on the Profit and loss (P&L) Statement.  The actual net Profit.
P & L :   or Profit and loss statement is a bookkeeping document listing all sales then subtracts all expenses to give a total net Profit on the bottom line.

Loss Prevention Associate:  More than a Security guard this person is in charge of finding and preventing the loss of
profits due to shrink.  Some companies use the term asset protection or LP department.

Shrinkage of profits effect everyone.  Prices may go up to cover loses.  Too much and stores may report a loss and close. 

So what causes shrink?  Well there different types and thus different causes.  First you have to be organized.  Disorganization is the biggest causes of shrink!   You must keep good records and a neat store.  If you don't know what you had delivered and your stepping on merchandise in your back room, then  you won't have any idea of how much your losing.

 Mistakes on paperwork is called Paper shrink and can easily case a lose in profits. Here's just a few examples. 

• You didn't check the count on delivery and you were shorted merchandise. 
• The merchandise is marked incorrectly and selling for the wrong price.  This might make the customers happy, but not your bottom line.
• A Mistake on your bills causing you to pay too much. 

 All these are examples of Paper shrink. 

Theft by both customer and employee makes up the rest of the shrink.  In another post I'll go more into how to control shrink and deter theft through loss prevention techniques.  But I needed to say if you are disorganize your employees and customers will take advantage of you.  I see this as more of a problem then you think.

A lot of companies refer to their shrink as being a percentage of sales.  Example would be that they want their shrink to be less than 2% of sales.   So the question is other than lowering the shrink itself can you lower your percentage.  The answer is yes, RAISE SALES.  Raising sales and keeping your shrink dollars the same will lower your shrink to sales percentage.  

So how do you know how much money you lost to shrink?  Do a yearly inventory.  If you keep good records you should know how much merchandise is in your store. If you don't you need to take a beginning inventory and keep better records from today on.  Any shortage since your last inventory is called shrink! 

Starting Inventory + Merchandised Received - Sales = On Hand Inventory

On Hand Inventory - Ending Inventory = Total Shrink Dollars

Shrink Dollars / Sales = Shrink Percentage

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