How to Get the Most from Your POS Software and Double Your Profits
- By Bob Twain
If you have retail POS software, you've probably invested significant time and money into the system...
So you better make DARN sure that you're getting a return on your investment!!
How can you better utilize this powerful software tool and make more money?
It's really simple, but first we need to lay some ground work and show how you truly can double your profits!!
When you think about it, there are only three ways to make more money:
And here lies your hidden secret to making more money and doubling your profits.
- Reduce your expenses.
- Increase your gross profit margins.
- Increase your sales.
If you just reduce expenses by 1%, increase profit margins by 1%, and increase sales by 1%, then you just might have doubled your profits.
When you break things down like this and implement some of the tips I have for you, this is EASILY doable.
Let's take a 1 million dollar a year business with a 40% gross profit margin as an example. If you improve each of those areas by 1%, you just put somewhere in the neighborhood of $18,000 in your pocket!
Not bad. And this is VERY conservative.
With some of the tips I'm about to show, you could easily improve by much more than 1%.
But this is a nice conservative approach that is doable. You can make just a 1% improvement in each area, can't you?
Let's get to it...
First, we'll start with an easy way for you to increase profit margins:
Step 1 - Determine your Gross Profit Margin goal.
You'll want a goal for your entire business and probably each department too.
Perhaps your overall goal is 45%.
I can't tell you what your gross profit margin should be because it's different for each type of business.
I suggest that you start by taking an educated guess on your own.
But since it's very important, you should eventually solicit help from retail consultants like Bob and Susan Negen from www.whizbangtraining.com. Or visit this website to help you come up with a good number:
But don't stop and wait to figure out your "perfect" goal. You should still take a guess and implement this tactic right away because it will make you money immediately.
Most specialty retailers settle for profit margins that are too low. But that's not for me to say because each situation is different.
Step 2 - Open your POS software and look at your gross profit margins at the end of EVERY day!
At the end of every single day, you need to look at your gross profit margins report.
You will also want to look at your profit margins for each department.
Did you hit your goal?
Step 3 - If you did NOT hit your goal, then fix it!
If your goal is 45%, but you were only at 38% today, what's the problem?
You're losing money!! So figure out the problem immediately...
You need to make sure your profit margins are on track every day, and when they're not, fix them.
- Do you have pricing errors that are lowering your margins? Find the errors and fix them right away!
- Do you have employees giving out too many discounts? Fix it!
- Do you need to rethink your pricing structure for a certain category? Fix it!
How do you find the problems?
With a little research, you can figure out what's wrong. You can start by drilling down into each "category" to figure out which area has a low profit margin. Then you can drill even deeper into certain invoices and products.
Your POS software should make it easier to do the research and find the problem. Your software should give you profit margin reports by Department, Category, Sales Person, Invoice, or Product Number. This will help you pinpoint the problems and track things down.
Is it really worth it?
It might sound like a pain in the butt to check this every day. But that's what you have to do. That's what the successful retailers do to keep their profits high.
If you're not checking this every day, then you are NOT managing your business. Your business is managing YOU!
Just by looking at your margin reports every day, you could literally raise your profit margins by 3 or 4 percent. How much more money would you have if your profit margin was 4 percent higher at the end of the year?
That's why this is so important. And this is why almost all successful and profitable businesses do this.
Make this a habit and part of your documented end of day closing tasks.
You'll sleep better at night knowing that you will be profitable tomorrow because you fixed the problems from today.
In the next issue I'll show you some easy ways to reduce expenses and increase sales.
To Your Success!
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