Business Tips Archives

7 Steps for Retailers to Reduce Inventory Shrinkage

July 1, 2017/0 Comments/in Accounting /by Team

Inevitably, somewhere between the manufacturer and the cash register, some of your merchandise disappears. Every retailer has this problem; in fact, it adds up to more than $42 billion in annual losses nationwide. The three biggest causes of shrinkage are administrative errors, employee theft, and customer theft. Here’s how to counteract them.

1. Use a good inventory management system.

Wherever human beings are doing the counting, organizing, and recording, errors are sure to happen. Choose software that:

Organizes product and vendor information
Integrates with your POS system so that inventory data is automatically updated after every transaction
Generates accurate purchase orders

2. Tighten up your inventory receiving process.

To minimize mistakes:

Cross-check against the PO at the time of delivery
Call the vendor within 24 hours to resolve inconsistencies
Tag and label merchandise immediately

3. Record sales consistently.

Any currently available POS system will do this automatically.

4. Take physical inventory.

It’s the only way to reveal discrepancies between what your inventory software says you have and what you have. Cross-reference the manual counts against software records to see where shortages are occurring, for example with a particular cash register or employee, or during the same shift and day every week.

5. Train employees in loss prevention.

Letting everyone know that you have a strong plan to stop theft can deter both employees and customers.

6. Improve pre-employment screening.

The reality of retail is that employee turnover is high and company loyalty usually low. Besides, employees have less supervision and easy access to your valuables. Do your due diligence in hiring people with no history of dishonesty, including nationwide criminal background checks and verification that resumes are complete and truthful.

7. Install a security system.

Large, visible cameras act as warnings to thieves to pick an easier target. They also help catch and convict criminals after thefts occur.

Inventory shrinkage is a challenge that will never go away. And that means your efforts towards loss prevention can never stop either. Success lies in ongoing processes and continuous attention to keep your merchandise right where it belongs.

3 Great Cash Flow Ideas for Retailers

June 25, 2017/0 Comments/in eCommerce /by Team

What do a used book store, garden nursery, and boutique clothing shop all have in common?

No, this isn’t the set up to a joke. Unfortunately, all three types of businesses are at risk of failing if their cash flow isn’t in good shape. According to the Small Business Administration, “inadequate cash reserves” is a top reason small businesses close their doors for good.

So whether you sell novels, shovels, or dresses with ruffles — if you’re a retailer, cash flow is king.

What exactly is cash flow?

Think of it like a checking account. Cash flow looks at all the money coming in and out of your business each month. If there’s more coming in than going out, you’re in the green! If you’re spending more than comes in, read on. That means your cash flow is negative and your business could be in trouble

Here are three simple ways to get your cash flowing in the right direction.

1. Bundle products

If you sell several accessories apart from your core offering, try packaging them together with a small discount. This can also be an effective way of clearing out dead stock while creating goodwill with your customers, who feel like they’re walking away with a great deal.

2. Understand the risks of discounting

If you do decide to bundle products or offer another type of sale, make sure you know exactly how that will impact your bottom line. You should know the profit margins on every product you sell and your overall cost basis – it’s the only way to determine if you’ll break even with the sale or take a loss.

3. Encourage repeat business

Offering perks or freebies to returning customers helps create loyalty and makes it easier for them to choose you over other options. Go old school with a punch card, get creative with a contest, or print an offer on receipts that are good for a future purchase.

If you’re struggling to determine the state of your cash flow, it could be time to call in for some backup. With Xendoo’s suite of affordable bookkeeping and consulting services, you’ll be able to spend more time at the “cash-out” bringing the cash.

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Pricing Your Services: Don’t Sell Yourself Short

April 1, 2017/0 Comments/in Small Business Tips /by Team

Does this sound like you? You offer great quality service, you have an excellent customer base, but you’re still making very little if any, profit. There could be many reasons for this, but one of the most frequent is that you’re not charging enough. Here’s how to stop undervaluing yourself and get the money you deserve.

Find out what’s behind your excuses.

Right about now, you’re probably thinking that you charge as much as your customers will tolerate. But if your competition is charging more, what’s the real reason for your low prices? Consider these possibilities:

You’re insecure about the quality of your skills or service
You haven’t added up all the benefits your client receives
You haven’t analyzed your competitive advantages and differentiators
You work extra long hours without getting paid extra

The vicious cycle of low pricing.

When you underprice your services, there are more consequences to your business than minimal profit margins. The more you lower prices, the worse your business gets, and the worse your business gets, the more you’re forced to lower prices.

You attract problem clients who will nitpick, disrespect your expertise and try to drive your prices even lower
Problem clients create an environment that repels good clients
You have no room in the budget for promotions and marketing, which attract more — and better — clients than low pricing does
Talented staff don’t want to work for you

6 steps to getting the prices right.

Work on your personal attitudes to self-worth and wealth acquisition, which may date back to childhood.
Do a competitive analysis: the benefits you bring to clients and ways that you’re different/better than competitors. If you can’t think of any, plan how you’re going to change that.
Immediately raise your prices to new clients by 20%. Transition existing clients more gradually. See how that works for a few months, then adjust as necessary.
Charge overtime for excessive demands for your time and talents, or just say no.
Make marketing and promotions plan to attract new, quality clients.
Bring in experts to support your weak areas, such as accounting or marketing.

Valuing yourself at your true worth isn’t just good for your soul, it’s good for your business. Get started on these tips today — you deserve it!

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Developing a Pricing Strategy for Professional Services

March 1, 2017/0 Comments/in Small Business Tips /by Team

As a professional services provider, did you know that the way you price your services is actually part of your overall marketing strategy? Whether you’re an accountant, lawyer, or business coach — if you’re pricing your services without thinking it all the way through, you could be underselling or underachieving the goals you’ve set for your company.

Not sure where to begin? Start by answering these simple questions and you’ll be well on your way to creating a great pricing strategy that works for you, while you spend your time working with new clients.

What are your business goals?

Yes, your goal is to grow your business. That’s a good start! But beyond that, what are you trying to achieve in your business right now? Are you attempting to reach a new segment of the market? Increase profit margin? Gain a larger market share? The answer to this question is the first step to determining how to price your services.

How does your target market make decisions when it comes to your services?

Different segments of the market make buying decisions very differently. As a financial planner, are you trying to reach young, budget-sensitive families, or very wealthy people close to retirement? It’s important to price your services so that your target perceives your value. For example, low-cost promotions and giveaways on premium services can undercut your value and confuse potential customers.

How is your competition pricing their services?

Chances are, you won’t be the only option your prospects are considering. That’s why it’s important to be prepared with an understanding of your competitors’ pricing so you can explain why your services cost more, or less than theirs. Keep in mind that the more competition you face, the more likely price will be the primary means by which customers make their decision.

Based on all of the above, which pricing strategy makes the most sense for your business?

Here are a few options to consider…

Premium Pricing

Is the service you provide especially unique? Is your target market very wealthy? If yes, pricing your services higher than the competition might be right for you. While higher prices = higher profits, keep in mind that premium-priced brands have the added challenge of creating a high-value perception in other ways to justify the higher price.

Economy or Market Penetration Pricing

Are you trying to steal business away from the competition or attract price-sensitive clients? Pricing your services lower than the competition is the way to go. If your low-price strategy is temporary to penetrate the market, be prepared for the possibility of an initial loss of income while you establish yourself in the market place – and have a plan for increasing your pricing in small increments over time. Also be sure to create the perception of value with other marketing strategies, so customers don’t confuse your low costs with low quality.

Psychology Pricing

This pricing technique attempts to affect customers on an emotional level before a logical one. Did you know there’s evidence that consumers tend to perceive prices ending in odd numbers as being significantly lower than they really are because they tend to round to a lower number? Some also suggest that removing the comma from a number over $1000 creates the perception of a lower price. There are dozens of psychology pricing strategies that range from how you align your numbers to the words you use next to them. These tools can be very effective, but it would be a mistake to start here before determining the real “why” behind your pricing.

Tiered and Bundle Pricing

Do you offer basically one service with options that vary in value? Try using a pricing structure that offers “good,” “better,” and “best” options – this can help your customers quickly understand exactly what they can expect from you and has the added benefit of capturing a larger market share by appealing to a wide range of shoppers.

Bundle pricing essentially combines services that would cost more on their own then when packaged together. If you have a number of a la carte services apart from your core offering, bundle pricing could be an effective way to create a perception of high-value at a lower cost.

Remember, your pricing strategy has a huge impact on your business’s ability to make a profit, but it’s just one piece of the pie. Looking at the overall financial health of your business on a regular basis is just as important. Xendoo handles your bookkeeping so you can always be aware of your financial health.

6 Ways to Cut Overhead Costs

February 1, 2017/0 Comments/in Small Business Tips /by Team

Every business has to spend money in order to make money. Here’s how to keep those ongoing expenses from getting too high and impacting your bottom line.

Take a fresh look at every single expense.

Chances are, some of them have become a habit but can now be either eliminated or achieved in a more cost-effective way.

Re-negotiate supplier and vendor contracts.

There may be things in there you don’t need anymore.
On the other hand, you may find that buying more services from one company costs less than piecemealing it out to several suppliers.
Ask for a better deal from existing suppliers.
Shop around for more favorably priced suppliers.

Allocate more marketing efforts to free or low-cost channels.

Word-of-mouth and tell-a-friend promotions to existing clients.
Social media campaigns.
Strategic partnerships with other local businesses.
Employee sales competitions.
Testimonials from satisfied clients.

Centralize purchasing.

One person in the company should handle it all, from office supplies to phone/internet providers to equipment rentals. This person will:

Prevent duplications, unexpected shortages, and confusion.
Be good at wangling better deals, concessions, and discounts.
Shop around for the best offers.

Re-think your office space.

Do you really need to be leasing so much space?
Do you have too much inventory/equipment on hand, taking up storage space?
Is there another space available that offers equally good access for current and prospective clients at a lower rate?

Control labor costs.

Avoid paying overtime by fine-tuning scheduling or converting to part-time employees.
Reduce turnover and hiring expenses by maintaining a happy, fulfilling work environment.
Cross-train employees to fill more than one role.
Prevent time theft with an app that tracks actual hours worked.

Solving the overhead problem is all about baby steps. Chip off a bit here, a bit there, and keep a year-round watch on expenses. It will all add up to some nice, healthy profit margins.

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