Back to Basics
Starting and running a retail business can be overwhelming. You pick the product, decide on where you are going to sell it and deal with all of the fiddly logistics about actually getting the product to the customer.
It is easy with all of this going on to forgot some of the basic ideas that will help your business grow and make money.
These are my four top tips for small retailers:
1 - Have a plan
No, I don’t mean a vague idea of what you want to do, or even a topline sales figure for the year.
A really effective plan has the following:
Sales and profit targets by month and preferably by week
Where exactly will your sales and profits will come from:
The mix of products you expect to sell
Where you will sell them (e.g. wholesale, own website, online marketplace or physical stores)
For online sales - where the traffic will be coming from (e.g. PPC, Social Media, Organic)
Taking the time to put together a detailed plan will give you a step-by-step guide to meeting your goals.
Without it, it’s much harder to identify where your time, money and effort should be spent.
It’s also a great feeling when you smash your plan - if you didn’t have one, you wouldn’t have the excuse to crack open the bubbly, would you?
2 - Eyes on the money
One of the most common mistakes that small retailers make is not understanding how much each sale costs them.
It’s easy enough to calculate how much you paid for an item and compare that to how much the customer is buying it for. But have you included every cost? All the packaging, postage, handling charges, that gorgeous glossy box you just knew your customers would love?
You would be surprised to know how many retailers, even really large ones, miss this really crucial rule and end up selling items at very low profit, or even at a loss!
Cost in every last penny that you spend on getting your products to your customer and make sure that each sale is generating enough cash.
3 - Measure EVERYTHING
One of my favourite sayings is “What gets measured gets managed”. If you don’t track what works and what doesn’t work, then you won’t start to see the patterns that will ultimately allow you to build your business to its full potential.
Track all of the key numbers that drive your business from number of customers, to conversion, to how much they are spending. Track which products and sales channels are making you the most money.
Track your marketing - how much are you having to spend to get the sales you want? Never do a promotion without first deciding how much money you want it to generate and checking if it did what you wanted it to do.
Measure where the money comes from, and you’ll figure out more and more ways to make more of it. It’s as simple as that.
4 - Trial constantly
If it’s good enough for the soon-to-be largest retailer in the world, it’s good enough for you. Love them or hate them, Amazon spend a vast amount of time and effort trying out new innovations. Many of them fail. But when they do work, like the Kindle or Amazon Echo, they often revolutionise the way we shop.
Small retailers should push their businesses forward by trialling new products, ways of selling and marketing approaches regularly. To avoid getting overwhelmed and doing this in a messy way, pick one thing to try each month. It might be a new social media platform, or a new market. It could be a different way of reaching out to the customer or a new line of products.
Make one new trial each month, and measure the results to keep moving your business forwards.
Make a plan, watch the money, measure everything, keep on trialing new things, and your retail business will ready to blast into a profitable future.
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