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The_12_Most_Important_Lessons_In_Retailing
| The 12 Most Important Lessons In Retailing
In today's fast-changing and competitive world, operating your
own business is a big challenge. If you apply the following
"Lessons Of Operating Your Business" -- you'll improve your
income, results and financial success.
1. Know Yourself Know your interests, skills, abilities, and
limitations. Having your own business is more than just creating
a job for yourself. To be a successful retailer, there are many
personal sacrifices and you have to be willing to make them.
Your basic roles are in marketing, finance, administration, and
the responsibility of personnel. To get the best results, it is
rare for one person to play all these roles equally well. You
must know which parts you can handle yourself and which parts
you're going to need help with. That's why it's so important to
be objective and take a close look at your overall strengths and
weaknesses. Ask yourself the following questions: * Do you know
the skills critical to your success? * Are you adaptable to
changing conditions? * Can you take advice from others? * Do you
obtain the necessary information to run your business?
2. Plan Ahead Many stores are run by well-intended people who
are not informed about their own operation. As a specialty store
owner, if you don't know the ins and outs of running your
business, you'll soon be out of business. According to leading
authorities, the main reason 80% of all new businesses fail
within the first five years is not money, but the lack of the
right information and knowledge. If you want to succeed, the
trick is to know how to make right the decisions by implementing
an effective business plan. Remember, if you fail to plan, and
you might as well plan to fail.
3. Know The Industry You can gain the greatest competitive edge
if you understand the intimate knowledge of doing business. The
critical difference is to be able track those obstacles that
challenge your future survival: The Competition -- Your
competitors size, services, location, marketing approach, type
of customers, suppliers, and pricing strategies. The Market
Environment -- Your local business climate, vacancy rate of
commercial space, median household income, level of education,
age groups, ethnic population, and the demographics of your
potential customers. To thrive and prosper, you must be
committed to learn, be clear about your objectives, and have the
desire and energy to accomplish your goals. * Does your area
have a population base large enough to support you and the
competitors? * Should you appeal to a wider range of customers
rather than a small segment of the market? * Have you seen
changes taking place that have affected where customers are
shopping?
4. Understand Your Customer Are you listing to your customers?
Make it your business to give your customers what they want, and
they will do business and buy from you. They are the reason you
are in business, and your future depends on them. The products
and services you provide should be in direct reflection to their
needs. Think in your customers' terms; buy, show, sell, and say
things that interest them, not just what interests you. Don't
forget, it is the customer that determines whether or not you
succeed. * Do you know the reasons why customers shop at your
store? (service, convenience, price). * Do you seek suggestions
from your best customers on ways you can boost business? * Do
you use a store questionnaire to aid you in determining your
customers' needs? * Do you ever try to re-establish lost or
inactive customers?
5. Keep Good Financial Records If you don't know where your
money is going, it will soon be gone. The "game of business" is
played with computers -- and the score is evaluated in dollars
and cents. Good financial records are like the instruments on an
airplane, they keep you posted of your height, direction, and
speed. Without them you're flying blind with no controls to
guide you to your destination. If you know how much you're
spending, buying and selling, you can take control and make your
business more money. * Have you computerized your business to
streamline everyday tasks and business procedures? * Do you use
sales forecasts, expense sheets, and financial statements on
regular basis? * Do you evaluate your operating expenses on a
regular basis?
6. Manage Your Cash It doesn't matter how unique your business
is, you can't survive without cash flow. Money coming into or
out of your store is the vital component that keeps your
business financially healthy. A Cash Flow Statement shows the
amount of money at the start of a period and then shows how much
cash was received from various sources and the reasons it was
paid out. If you budget wisely and know the interval of your
monthly income and expenses, you won't have to worry about
running out of money. * Watch your monthly overhead and
operating expenses ratios * Make a budget and follow an
open-to-buy plan to eliminate overbuying * Buy closer to the
selling season to minimize the risk of making a bad buy * Don't
accept deliveries you can't use or arrive after the completion
date
7. Use Sound Management Practices As store owner, you are also a
manager. This means knowing how to run your business from the
top to the bottom. You have to make decisions, offer customer
service, manage time and resources, and know how to merchandise
and run the business better than anyone working for you. Value
your employees, they're your most valuable asset. Train your
employees and provide them with the confidence and skills to do
their jobs better. Give your employees the opportunity for
growth, treat them fairly, pay them what they're worth, and they
will help make your business successful.
* Do you train your employees to service and work with customers
in a professional manner? * Do you have a program to reward your
employees for their extra efforts and innovative ideas? * Do you
empower employees to make important decisions, even if it means
losing money?
8. Develop A Distinctive Image Your image is important and links
all the areas of your business together. It is the reality of
your customers' perception of your store name, location,
appearance, building, landscaping, entrance, floors, doors,
counters, dressing rooms, rest rooms, products, prices, visual
merchandising, signs, window displays, business cards, invoices,
newsletters, advertising material, customer service, and
anything else that relates to your business. Right or wrong,
your image can be a "make it or break it" situation. * Is your
business unique and does your merchandise fit into a niche that
competitors don't have? * Do you use newsletters to remind
customers of the products or services you provide? * Do you
implement proven concepts and formulas of other successful
retail firms? * Do you grade your store's location every year in
regards to appearance and accessibility?
9. Control Your Inventory The function of your inventory is to
generate sales. All retail stores need to manage inventory. It
is your money sitting on a shelf and represents a large portion
of your business investment.
The small retailer who merely watches the store's shelves can't
maintain a proper balance between the right amount of
merchandise and probable customer demand. That retailer's buying
and selling will suffer through lack of information concerning
color, size, trends, and customer preferences. Without adequate
control, slow-moving inventory becomes dated, shopworn, damaged,
and very costly. Do you evaluate the amount of inventory you
carry, and fine tune your operating expense ratios on a regular
basis? Generally, inventory control can be summarized as
follows: * Matching the stock on hand with customers needs *
Controlling the investment in inventory * Minimizing markdowns *
Controlling shortages * Improving purchasing procedures
10. Buy and Price For Profit To fully understand the nature of
retailing, one must start with the concept that the original
price of your merchandise is nothing more than a temporary
estimate of what the customer is willing to spend. Most stores
use a "keystone" markup that applies to their product or
service. What they lack is a pricing strategy based on an
item-by-item calculation for regular, promotional, and off-price
merchandise...
To boost sales, retailers must focus on items, price, and
efficiency and by countering with lots of store celebrations,
glamour and fun. To become more competitive, attend trade shows,
join buying groups, and seek out manufacturer discounts that
allow you to purchase merchandise at below wholesale prices.
By offering the new price-conscious consumer better values,
you'll be able to: attract more customers, improve your average
sales transaction and offer customers more opportunities to
visits your store. * Do you test different aspects for promoting
business: -- new offers -- new items -- new prices? * Do you
identify different vendor performance, mark-up, and turnover? *
Do you use a system for tracking those products that are your
best-sellers? * Have you tried to increase sales by offering
better prices, more value, or add-ons?
11. Learn From The Pros It takes experience to master the skills
of running a successful business. First, you must learn How,
Who, What, Where, and When. How Much and How often do you need
to advertise to profitably promote your business. How to quickly
manage and adjust to the ups and downs of the seasonal profit
cycles of your business which include: inventory, overbuying,
markdowns, turnover, timing, deliveries, expenses, and projected
sales.
It's your money, so with expert planning and follow-through, you
will be able to insure bigger sales and higher profits. A smart
approach that maximizes your overall business and financial
performance, while minimizing time, effort, and risk. 12. Ask
For Help When You Need It Remember, getting results is what
counts! With outside advice and assistance, your quest for a
major process of improvement can get a major jump start. Don't
be too proud to ask for help, we all need help sometimes.
It is important to recognize -- what you don't know can end up
costing you money, and greatly reduce the chance of reaching
your long-term goal. And most important, you'll have all the
tools you need to achieve a high level of success.
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POWER Retailing, a retail-consulting firm based in Phoenix,
Arizona. The company works with retailers to develop marketing
strategies and promotional plans to quickly strengthen their
cash flow and financial position. POWER Retailing, Inc. 1859 E.
South Fork Drive, Phoenix, AZ 85048 (602) 460-1980. The Internet
address is: http://www.retailing.com
About the author:
As a former store owner, Bob Nelson understands the problems
faced by those struggling to operate profitable retail
operations. With a keen understanding of the many challenges, he
is qualified to give definite and practical answers to specific
operating questions. He turns his attention to the bottom line
and offers workable solutions, not just advice. And perhaps most
importantly, how to adopt new strategies to gain the greatest
competitive edge and a wonderful peace of mind.
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