If you have retail POS software, you've probably invested some time and money
into the system... It is better for you to make DARN
sure that you're getting a return on your investment!!
How can you better use this powerful
software and get more revenue?
It's simple, however first we need
to lay some ground work and show how you genuinely double your profits!!
When you think about it, there
are three simple ways to get more revenue:
- Reduce your expenses
- Increase your gross profit margins
- Increase your sales
By just reducing expenses by 1%, increase
overall profit margins by 1%, and increase sales by 1%, then you might have doubled
your profits.
When you break down things like
this and implement a few tips I have for you, this is simply possible.
With a few tips I'm going to show
you could easily improve by more than 1%.
We'll
start with a simple way for you to increase profit margins:
Step
1: Determine your Gross Profit Margin goal
You'll need a goal for your complete
business and probably each department too.Perhaps your overall goal will be
45%.
It is difficult to say what gross
profit it should be because it's depends on the type of business.Many of the retailers settle for
profit margins that are low. But it depends on the circumstance.
Step
2: Open your POS software and look at your gross profit margins at the end of
the day!
At the end of the day, you have
to take a look at your gross profit margins report.You will also need to take a look
at your net profit for every department.
Did you hit your goal?
Step
3: If you didn't hit your goal, fix it!
If your objective is 45%, yet you
were just at 38% today, what's the issue?
You're losing money!! So figure
out the issue right away...
· Do
you have pricing errors that are bringing down your margins? Discover the
errors and fix them immediately!
·
Do
your workers giving out discounts too much? Fix it!
·
Do
you have to reconsider your pricing structure for a certain category? Fix it!
You have to make sure your profit
margins are on track each day, and when they're not, fix them.
How
would you discover the issues?
With a little research, you can figure
out what's wrong. You can begin by drilling down into every "category"
to figure out which zone has a low profit margin. At that point you can drill
much deeper into specific invoices and products.
Your POS software should make it easier to do the research and discover
the issue. Your software should give you profit margin reports by Department,
Category, Sales Person, Invoice, or Product Number. This will help you to
pinpoint the issues and track things down.
Is
it really worth it?
It may seem like a pain in the
butt to check this consistently. But, that is the thing that you need to do.
That is the thing that the successful retailers do to keep their profits high.
If you're not checking this on a
regular basis, at that point you are NOT managing with your business. Your
business is managing YOU!
Just by taking a look at your profit
reports each day, you could truly raise your overall margins by 3% or 4%. How
much more money would you have if your profit margin was 4% higher at the end
of the year?
That is the reason this is so important.
Furthermore, this is the reason successful and profitable businesses do this.
You'll sleep
better during the night knowing that you will be profitable tomorrow since you
fixed the issues from today.
