8 tips to increase Profitability

1. Top 8 Tips to Increase Retail Profitability Michael P Cotler Retail Growth Consultant

2. Introduction • As with all businesses the bottom line is HOW do we increase the bottom line leading to higher PROFIT. • Many of the ideas listed here are not rocket science. • Rarely nowadays do we have amazing incredible new ways to do things, most increases in Nett Profit are simple (when you know how)

3. Tip 1 • Tip 1 is the most obvious. • Increase SALES. • Bare in mind that Increasing sales (at pre-determined) margin will automatically increase Profit. • Also bear in mind that increase in Sales needs to have any VAT/GST taxes paid over to the relevant authorities.

4. Tip 2 • Examine Wage Costs as a % of turnover. • One of the biggest costs for any business are salaries/wages. • Do the wage costs of the business look proportional? • Look at reducing Overtime if it is paid.

5. Tip 3 • Examine Supplier Discounts. • Most suppliers will give an additional prompt payment discount for early settlement. • Examine costs of sales- (this is the cost of the goods that you buy to resell). • 1-2% points per month discount is equivalent to a large annual Nett Profit increase.

6. Tip 4 • Examine Utility/Telephone costs • Most utility companies have business rates. If you closely look at the monthly cost of Light, Heat & Telephone costs, it pays to shop around to try to reduce these costs that directly impede the profitability of the business.

7. Tip 5 • Examine Marketing & Advertising Costs. • Re-examine cost of acquisition/ marketing costs. • Note- Do not mistake the re-examination of marketing costs against spending money on advertising that is ineffective & costly. • Advertising & Marketing should always be a balanced and comprehensive cost that delivers the maximum “bang for your buck”.

8. Tip 5 continued • There is always a cost to aquiring a sale. • I was once told that the marketing cost of selling a typical family car exceeds $350 • This may be over a number of mediums • These are “easy wins” in the way that the services are procured or renegotiation of contracts for providers.

9. Tip 6 Increase- YES INCREASE resource to training your employees. It goes without saying (and my other presentations make mention of this) that TRAINING and continues Education for Employees is ESSENTIAL in improving your business bottom line.

10. Tip 6 Continued • These expenses should be seen as a worthwhile investment in your business. • A well trained, motivated & engaged employee is THE most simple way to increase sales (which leads to profitability) that I have ever known. • Of course the training needs to be structured, but when it is- WOW it works!

11. Tip 7 • Customer Retention • It is 10x cheaper to retain a customer than go into the market and find a new one. • Look after your customers and they will repurchase. • Loyalty is a massive Profit driver.

12. Tip 8 • Review Insurance costs • These costs can be simple Employer Liability insurance to a full fleet motor policy. • Insurance is a very competitive market place. • Ensure that you either retain a broker who is incentivized or shop round. • Ensure that you achieve the same summary of costs for lower premiums.

13. Conclusion • Business owners have 2 ways to improve profitability when all is said & done. • Increase Sales • Reduce Costs. In the 8 tips that I have shared with you, these are all variants of the theme. Good luck and Keep on selling!!

14. Information on the Author Michael Cotler is a retail Growth Consultant with considerable experience in running retail & online businesses. There are a series of presentations where Michael exposes “must have” Business management knowledge for FREE. For further information please visit • www.michaelcotler.com