By Bill Scott
As a provider of services to retailers and convenience stores here is mine:
Eliminate the 70% of inventory that is either not selling or unprofitable.
The remainder is cross-subsidizing your losses and producing ALL of your profit. I think it’s important to identify which ones. Don’t you?
Get a hand on how unrelated items work together to make each market basket profitable. Some under-performing, lower-profit products can actually increase the sales of more profitable products. Which ones are they?
Retailers should just say “NO” to unprofitable customers. 45% of all sales transactions are non-profitable. The rush to increase foot traffic alone can result in disaster.
Increase your sales by 40%. Empirical studies have shown that reducing inventory can increase sales dramatically. Knowing what to keep on hand, and what to get rid of is crucial.
Drastically reduce the use of working capital. 63% of your working capital is probably wasted… but which 63%? If you are moving one asset (cash) to another asset (inventory), make sure they are at least of equal value.
Double, triple or even quadruple your profits. Generally, administrative costs are static but growing in size. Any amount of added profit will go straight to your bottom line. As an example, a store that has annual sales of $800,000 makes a net profit of around $16,800. If that store only made one penny more on each tender it would result in a 21% increase in cash. Wow! Imagine what a nickel could do for you?
Say goodbye to overstock and out of stock. Eliminate excess stock and never again run out of products that sell. I once knew a convenience store operator that had his employees make a mark on every item they put on the shelves. At the end of the month, if there were still items on the shelf that were marked, he adjusted his next order accordingly.
Always concentrate on increasing the value of your company. High inventory volumes and low turns will ruin your valuation. It’s not only good to know if you decide to sell, a low valuation is the sign of a sick and dying company.
Poorly planned promotions may actually cost you money. Can you spot a bad one before it goes into play?
Don’t take any promotion lightly. I’ve seen it time and time again. Affecting the balance of sales in a store can be dangerous and may have long lasting and far reaching effects.
Your employees ARE your most valuable asset. Treat them accordingly. After all, they are the face you present to the public. Grumbling and complaining is always followed by stealing and grazing.
I have more, but these are by far some of the most important. We need to talk.