Too often small business retailers focus on the sale of their business as their pay day without actually acting, every day, to ensure that day delivers the best value for them.
Every day in any local small retail business there are decisions that can be made, steps that can be taken that nurture more value from the business. These steps, most of which cost little or nothing to implement, can have long-term gains for the profit and loss of a retail business.
We see this in our work with more than 3,000 local small business retailers. We see the value of good moves. We see the costs of inaction.
Thinking about this, what we see, here is a list of 10 things any local small business retailer could do in their business to drive value today and, more importantly, value tomorrow when they choose to sell their business.
This list is in order of the value we see being achieved in local small retail businesses that act on these things.
- Deal with old stock. Old stock is worthless to you and anyone being the business. Keeping it is a waste of space, time and cash. This work starts with you knowing what is old stock – our POS software helps with this.
- Trim the roster. Labour costs around 11% of revenue. Every dollar saved is a dollar that benefits the P&L. Yes, this likely means more hours for owners … but you have to ask yourself about your focus as to when you want your pay day.
- Review opening hours. Often in business data we see opening hours opportunities – either for longer hours or shorter hours. be guided by your business data.
- Clean up online. Be easily found. Review your Facebook, Google and other listings. Make sure they are current for if they are not it reflects poorly on the business.
- Declutter. An appealing looking business is easier to sell. On the shop floor, at the counter, in the back room – declutter and make the business more appealing to you, prospective buyers and customers.
- Review unprofitable activity. Look carefully at each category of product or service you offer. Get to an accurate understanding of the value of each. Consider quitting those that are under performing.
- Price for margin. While plenty of retailers pressure suppliers for lower prices, too few actively consider what they could sell some items for, missing the opportunity for a better margin. Where you can, price for a better margin.
- Document. Write up your processes, systems you follow and more. Document this and make the business easier to run and appear easier to run. The documenting process itself is likely to lead to efficiency opportunities uncovered. The resulting documentation will make the business more appealing.
- Reduce debt. We see too many retail businesses where debt is used with an expectation that it will be dealt with when the business is sold. Clean it up now as much as you are able. The less interest you pay the more money the business makes.
- Balance sheet clean up. While selling a retail business will often not include selling the company structure, the tidiness of your balance sheet may not be ideal for that time you do come to sell. It’s better you discover this and work on it prior to needing to.
This advice is part of the regular advice Tower Systems provides its customers.