It’s far too easy for your staff to discount just to make a sale. Its quick, it’s easy, and it’s the store profit that suffers.
Even when you work in an industry that readily negotiates on prices, such as Markets, 2nd hand goods, Auto Industry etc, you and your staff need to stand by your product. If you have a good quality product, listed at a fair and reasonable price, that cannot be purchased in 5 minutes cheaper down the road, then you MUST stand by your product.
“I see it cheaper on E-bay” – Yes you do. Ebay stores don’t have expensive rents and don’t need to make the profit margins you do.. however.. They can’t see and touch the product. In your store they have it in their hand and can take it home with them NOW. You won’t charge them any additional postage, and they want have to wait for it to be delivered.
Ebay isn’t going to offer ANY sort of warranty. You are.
Sell the value in you, your team and your product. It’s actually quite hard for someone to ask for a better or discounted price.. astoundingly, it’s far easier to respond with,” its priced very well right now”
If discounting is the culture within your business.. keep it uniform and keep it small.
“I will give you 5% off because you’re a loyal customer” “How about i will give you 7%, more than I would give anyone else?” “You drive a hard bargain sir, OK, 10% if you’re going to walk out the door with it right now”
This politely makes reference that the price will NOT be held in the future and a decision must be made right now. In most cases, customers will take the offer.
Never jump to 10% / 20% or maximum discount.. your just shooting yourself in the foot.
Stand by your product and your pricing. If it’s a good quality product at a fair and reasonable price, then don’t let yourself or your staff be bullied or threatened by customers into reducing a price.
Matty Mac - Oz Retail Group
This is something I have said my entire career. Every job I have had, Every staff member i have taught to, Every business I consult.
What does it mean exactly?
It actually means a number of things. Not only the very obvious..
Get the money in the till, but it also means this...
Work the customer – Go above and beyond to show the customer you care, give examples of how products are used, provide a level of service that customer would have never before seen. Even if that customer doesn’t immediately purchase, they will have no other option BUT to come back to you when they are ready to.
Make the deal – If your haggling over price for example, Why are YOU hesitating? If the item is priced right, there should be no price objections. Your product is good quality, it will fill the desired need for the customer, it’s not overpriced in store, nor is it available far cheaper elsewhere. Make no mistake.. a sale WILL be made at this point.. either you sell the customer the product, or the customer sells you a reason NOT to buy!
Cycle your stock – Clear it out.
If you have stock in your store that has been sitting there for more than 3 months.. why isn’t it selling? Is it overpriced? Is it outdated? Is it dirty? Is it in the wrong position? Is it in the wrong store? Whatever the reason it’s still sitting there.. It shouldn’t be.
It needs to go. It’s costing you money having it sit and take up valuable shop space. Mark the price down to move it. Wipe it down and give it pride of place.. whatever it takes. Free up the space and the money for something that will sell.
Up sell – Would you like fries with that?
Nearly everyone in the western world has heard those words.
It’s so easy to do and it makes so much sense.
Ask for the sale – It’s a rookie mistake NOT to.
You would be amazed how many sales I have watched walk out the door, just because the salesperson didn’t ask the question. You can ask it 100 different ways.. The most obvious being directly
“Would you like to take that today?”
If you like a little different, try the following..
“Would you like to pay cash or card?”
“Come over to the counter and I will ring that up for you”
Or if you want to leave a lasting impression.. Be Direct.
“What’s your wife/Husband going to say when you take this home tonight?”
..or any number of variations.
Be proactive on your store floor.. show your staff how its done.. lead by example.
But most importantly..
Get that “Money in the till Baby!!”
Matty Mac - Oz Retail Group
These words were taught to me many many years ago by a mentor of mine. A business owner whose store I ran for him.
When I was quite green as a manager, I used to call him up and ask him questions, trivial things.. such as, could I re-arrange the store, or could I adjust a certain customer onto a new sales discount structure? Fairly impactful things that, because it was his money, I though it be best to get his permission.
He gave me those wonderful words of advice, and like a lightning bold to the head, suddenly empowered me to make my own decisions.
He went on to explain that any staff member who has a reasonable level of intelligence and knows how the store makes money, can make a decision for themselves. Even if a bad decision is made down the line, it can be discussed, forgiven, and the same mistake won’t be made again in the future.
By empowering your staff to make their own decisions, you release them in a way you can’t imagine. They become far more proactive towards the business and take ownership of their decisions within it.
Teach your staff to make the right decisions for themselves, and you will have far less Micro-Managing to handle.
Matty Mac – Retail Consultant
What is GP %? Gross Profit Percentage is the profit margin on a product after the initial wholesaler purchase cost. This refers to product only, not services that you may offer.
Lets work on the 40:20:40 rule.
..an item retails in your store for $10.
$4 of that goes to the manufacturer of the product.
$2 additional will probably go to the distributor of that item.
Leaving $4 profit for you.
Now.. Depending on who you get the item from, or what the item is, you may pay $5 or $6 direct to the manufacturer and bypass a 3rd party wholesaler altogether, leaving a profit margin of somewhere between $4-$5. This is a better deal. If you can source your product direct, you may be able to save some dollars bypassing a distributor, however.. be aware!!
Some products in some countries have a dedicated supplier. Going around them and sourcing your product direct, which is called “Parallel Importing” may cause you some grief down the line.
Be true to your wholesalers. They can cover you for such things as warranty replacement, and faulty goods, so you would be wise to stick to a good working relationship with them.
Gross Profit is different to your NET Profit. Net Profit refers to your profit margin AFTER Tax & Expenses, usually measured on your overall product range on a weekly, monthly or annual basis.
Working out your Gross Profit %.
A simple calculation.
RRP (Sale Price) minus Wholesale (Cost) = GP (Gross Profit $)
GP Divided By RRP x 100 = GP %
$9.95 - $4.95 (incl GST) = $5
$5.00 / $9.95 = (0.502 x 100) = 50% GP
Ideally, I would advise a Retail store should be working on a minimum GP of 38% on any single product with the overall GP at least 45%. Any single item above this should be considered your premium product and given Pride of Place within your store.
Any discounting will directly affect your GP% so be careful.. keep your eye out for my next article entitled “Saving your GP.. when NOT to discount” (link)
Written By Matty Mac Oz Retail Group
When setting up a small business, there are a number of legal essentials that you will need to consider and set up before trading.
These provide you with a firm foundation from the outset and can assist you in avoiding costly disputes down the track.
Although creating this legal framework can seem tedious and expensive, it’s a necessary investment into your business, particularly if you intend to grow and expand.
We have set out below a quick checklist to ensure your business starts off on the right foot.
1. Choose a business structure
The most popular options are a sole trader, partnership, company or multiple companies (i.e. holding company and operating company) and a trust with a corporate trustee.
It’s critical that you first obtain legal and financial advice to assist you with determining your chosen structure best suits your current and future business goals.
2. Form your business structure
Once you have decided on the most appropriate structure for your business, you will need to register with the Australian Business Register (ABR) (for sole traders and partnerships) or ASIC.
You can also register your business name, obtain an Australian Business Number (ABN), register for Goods and Services Tax (GST), Pay as you Go withholding tax (PAYG) and a Tax File Number (TFN).
3. Obtain the necessary insurances
Insurance is essential for your peace of mind and to provide your business with financial reassurance in the event something goes wrong.
Recommended business insurances include:
– Public liability insurance
– Professional indemnity insurance
– Product liability insurance
– Workers compensation insurance
– Assets and revenue insurance
– Motor vehicle insurance
– Fire and perils insurance
– Income protection insurance
– Death and total and permanent disability insurance
4. Obtain the necessary licences/permits to operate your business
It is important that you research the laws surrounding your chosen industry and understand the necessary licences/permits required to operate your business. Without these licences or permits in place from the start, you may be setting yourself up to fail with potential liability for costly fines and risk exposure.
5. Protect your intellectual property
Your intellectual property is an asset to your business and you can protect this through copyright and trademarks. You should also register your domain names and social media names before you commencing trade.
6. Protect your website and social media
7. Have Your Key Legal Agreements In Place
There are a number of legal agreements which you may require when setting up your business so as to ensure it has the best possible start. These agreements include:
– Partnership Agreement
– Shareholders Agreement
– Confidentiality Agreement
– IP Assignment Agreement
– IP Licence Agreement
– Client Agreement/Business Terms and Conditions
– Manufacturing Agreement
– Distribution Agreement
– Franchise Agreement
– Employment Agreement
– Contractor Agreement
– Service Agreement
– Staff Handbook Policy.
As you can see, there are a number of legal essentials you will need to consider when setting up your small business. While it may look like a lot of work, with the assistance of a trusted legal team and accountant, you can help ensure you business has a solid grounding from the start so that you can spend your time focusing on achieving your business goals!
Written by Ursula Hogben via The Entourage