/U/Technology – Small bussiness accounting solutions

Top 7 Tips for Finding the Right Business Software

July 29, 2018 0 By Xienan Shaw

You didn’t start your business because you wanted to track cash moving in and out of your bank account. Nor to complete complicated forms for the government. You hadn’t even contemplated how business software could help you do these tasks, mostly because you didn’t know you need to do them.

But once you realise you need software to help you, how do you go about finding the right solution? Here are my top 7 tips to help you make the right choice.

1. What do you want to achieve with business software?

We progress and achieve great things by facilitating and embracing change. However, change for change’s sake is counterproductive. So exactly what is it you hope to accomplish by changing your software? Increased efficiency? Lower costs? Paperless office? There are many reasons why you should review your technology, however without a good understanding of the desired outcome, you may not find the right solution.

2. Build your business processes

Before you even start thinking about the tasks and workflows you need your software to help you with, you need to ensure that you have the right processes for your business. Automating or building upon the wrong workflow will not help your business to run efficiently. Don’t be precious…just because you’ve always done something a certain way doesn’t mean it’s the best way of doing it!

3. What are your “must have” and “nice to have” features?

It’s very easy to get carried away when thinking about all the things technology must be able to do. Think about what is so fundamental to the smooth running of your organisation that you cannot do without it and separate these requirements from the features that would be beneficial, but that you could cope with out.

For example, when buying a car 0 to 60 mph in under 5 seconds and a convertible roof may be nice to have, however space for 2 children’s car seats and plenty of room in the boot for a pushchair may be essential.

4. Review your existing technology and software

Review if and how your existing applications help your workflow. Every organisation is different, however there is almost certainly one application or function that is more important than the others. This could be managing customers, sales and marketing (CRM), maintaining financial records (bookkeeping/accountancy applications) or reporting on key metrics or cash flows, like Float.

5. Make a shortlist of business software you want

You will now have a very good understanding of what your ideal process is, what functionality is already served and what is missing from your software stack. It’s time to start plugging these gaps! Let’s assume your accounting software is the one thing you do not need to change. You need to have better control of your sales process and need to improve your cash flow. To remain lean and efficient your software packages need to be able to talk to each other, using APIs. Start by looking at your accounting software’s website for existing integrations – there will almost certainly be many. Review the features these “partner” apps have and short list the ones that meet your essential features. If there are none which do, a wider internet search, asking questions in your network or an independent business software company can help.

6. Demos and trials

Many software vendors will offer free trials or will arrange a demo with one of their team. Use these opportunities to see how the application could work for your organisation. Ask lots of questions and ensure you have a great understanding of how the software will work for you and understand what the cost will be, including any setup or implementation fees.

7. Implement your business software stack!

Once you have selected the right applications you now need to get it up and running. For cloud based software there may not be any installations required, however it is likely you will need to set and configure it, especially if you plan to link with other programs. This can be time consuming and costly if you get it wrong. The software vendor may offer support with this, or charge for implementation for more complex solutions.

Summary

With many hundreds of business software applications and integrations between them, finding the right flow for your business can be time consuming and daunting. It may take several days per application to get it right, however following the steps above will help you get the right solution. Or of course, you could contact the business software experts at Octopus Blue!

Andy Bailey will be speaking in more detail on this subject at Accountex at 10:15 on 11 May.

About Octopus Blue
Octopus Blue help SMEs optimise their processes and software, enabling you to operate in the most time efficient and cost effective way. Octopus Blue are uniquely independent, whole of market, business software experts. Our experienced consultants will implement and configure your entire software stack, empowering you to laser focus on what you do best.

Cash Registers vs. POS Systems: How to Tell Which Is Right for Your Retail Biz

July 26, 2018 0 By Xienan Shaw

To handle that kind of volume, brick-and-mortar businesses need to arm themselves with the tools — both hardware and software — to keep operations running smoothly.

The heart of a retail business? The point-of-purchase, cash register or point-of-sale (POS) system. While many may use those terms interchangeably, they’re not one and the same. In fact, there are many key differences that would affect which route you go for your retail business. Let’s dive into what the traditional cash register is, what a POS system, and how they’re different — plus how you can choose which option most suits your business.

What is a cash register?

The official definition of the term “cash register” is “a business machine that usually has a money drawer, indicates the amount of each sale, and records the amount of money received.”

A cash register logs transactions that occur in your store, creating a record of the money coming in and going out. It can also calculate and add taxes, generate receipts, and offer basic sales tracking. Many major grocery stores and department stores use cash registers.

The cash register was first invented back in 1879 by whiskey, wine and cigar merchant James Ritty as a preventative measure towards employee theft. And while we’re willing to bet employee theft was a lot more rampant back then, it’s still a concern for retailers. In fact, employee theft is the second-most leading cause of shrinkage for retailers, according to data by the National Retail Federation.

Cash registers have come a long way since their early iterations. Now, we have electronic cash registers that you commonly see in restaurants. While a basic cash register is set up to handle cash transactions, newer ones have more robust options.

Generally speaking, cash registers are only a few hundred dollars in cost, but if you want additional functions like credit card readers, barcode scanners or scales, then you’ll need to invest in additional hardware.

What is a POS system?

Point-of-sale is defined as “of or relating to the place (such as a check-out counter) where an item is purchased.” Point-of-sale (also point-of-purchase or POS) systems are the mechanisms with which retailers and customers can execute purchases.

Basically, a POS is like a cash register on steroids: You can use it to administer cash transactions and do everything that a normal register would do, plus you can gain more detailed reporting on those transactions. A POS usually has a touchscreen interface that employees use to administer purchases.

A POS may be comprised of a few components:

Touchscreen device
Card scanner
Chip reader
Barcode scanner
Computer
Server (the Cloud)

POS systems were introduced in the 1970s, when cash registers evolved into computerized POS terminals which could perform additional functions, like credit card processing and basic inventory management. They gained popularity and became commonplace in retail environments in the ’80s and ’90s. According to Transparency Market Research, the global point-of-sale industry stood generated $36.86 billion in revenue in 2013, 34% of which claimed by retailers.

Over the years, the POS system has become more advanced. Now, many POS terminals integrate with other retail business tools, such as inventory management, accounting or warehouse management software. Some are robust enough to act as a retail management command center that handles everything sales, inventory and customer management.

POS systems are essential for multi-channel sellers, as they can track and sync data across multiple store locations, warehouses and/or fulfillment centers. They provide a centralized location for data which allows retailers to stay on top of various channels and stores from a single platform. Boston Retail Partner’s 2015 POS/Customer Engagement Benchmarking Survey supports this outlook. According to the study, there will be a 663% increase in retailers with a single commerce platform in 2019.

POS systems also have features for a number of other components to your retail business, including:

Customer loyalty programs
Gift cards
Marketing
Personalization
Data for informed business decisions
Automation
Accessible from the Cloud for mobile business owners

What is a mobile POS?

Mobile point-of-sale (mPOS) are an even more recent evolution of the modern cash register. Predictably, the main difference here is that a POS is not mobile, whereas an mPOS is. This is helpful for sellers who have multiple locations or frequently sell at events or markets, but it’s also useful for single-location brick-and-mortars.

mPOS systems make associates mobile, just like your customers. So, rather than forcing a customer to make their way to the point-of-purchase, the point-of-purchase can come to them. Anytime you can reduce friction along the path to purchase, you’re helping your odds at closing the sale. In fact, more than half of UK retailers rated mPOS as the most important in-store technology for consumers in 2014. They’re also typically smaller in size than a standard POS, which supports mobility.

It’s fairly common for an mPOS to have a monthly subscription fee.

Cash register vs. POS system: What are the differences?

Cash register vs. POS system: What are the differences?
Cash register	POS
Price	Generally less expensive; $100–$800	Around $1,200+ upfront plus $1,000/year in fees, but you typically get more bang for your buck.
Ease of use	Very easy to learn and train employees to use; has basic functions.	Modern POS systems are as user-friendly and intuitive as most mobile apps. But for users who need support, some vendors provide email, phone, and online customer service and training.
Reporting	Basic sales reporting.	Multiple reporting options; improved accuracy. Some POS systems also come with sophisticated retail analytics that track sales, inventory, customers, and more.
Biggest advantages	Long-lasting; reliable.	Robust, grows with your business, offers much more features and functionality.
Biggest drawbacks	Limited in functionality; archaic.	Typically comes with subscription fees and may require regular software updates.

How to decide between a cash register or POS system

Choosing between a cash register, POS and mPOS for your retail business is like any other major business decision: The right answer completely depends on your unique needs. So, while there’s no one-size-fits-all answer here, there are a few considerations and questions that can guide you through the process:

What are my biggest pain points NOW? What’s the cause of those pain points?
Which types of payment methods does my business need to be able to accept?
Do we need to collect tax(es) for sales? Are they all the same tax, or are there different taxes for different customers, sales, stores or products?
How busy is my store on average?
How many departments, categories and product SKUs do I need to track?
How many products do we carry now? How many will we carry in the future?
How many registers do we have or need?
What is my current customer loyalty program?
What does my staff like or dislike about our setup?
How do we administer receipts to our customers?

Here’s a quick summary of the steps we’ve outlined in our POS Buyer’s Guide:

1 Define the needs of your business. Refer back to that list of questions to understand what your core needs are.

2. Take note of the required hardware. This includes barcode scanners, scales, receipt printers, etc.

3. Set a budget. If you’re choosing mPOS, you’ll likely need to account for a monthly subscription fee, whereas cash registers and traditional POS may be upfront costs with occasional maintenance expenses.

4. Audit and compare POS systems. Ask other retailers in your network or the other business tools you use (accounting, inventory management, etc.) for referrals. Check sites like Capterra, Product Hunt or Merchant Maverick to see what others like/dislike about your options.

5. See the POS in action.Watch the demo videos on the POS websites and request a live demo with your top choices so you can ask more questions to a real human.

6. Get the setup right. The best POS companies will help you through this process. To reap the most benefits from your POS, you’ll want to invest time in the beginning to setting up templates, automations, workflows and other settings.

7. Make the most of your POS system. You’ve invested the time upfront to set yourself up for success, so now it’s time to use it.

What do you use in your business to administer transactions? If you’ve upgraded to a POS, which features have you benefited from the most?

Understanding the Cosmetic Industry’s Supply Chain

May 29, 2018 0 By Xienan Shaw

They must employ a multi-step logistics function to manage retailer requirements to help overcome the challenges caused by supply and demand inherent in the cosmetic industry.

Supply Chain Fundamentals

Due to the nature of cosmetics, their consumers are persuaded by demanding products that are hot today, that may go out of fashion tomorrow. We see cosmetic companies drive this consumer behaviour by promoting the latest trends, and often using celebrities to endorse their products. Once cosmetic companies have generated demand, they need now to make sure those products are available for purchase. The process for handling products through to the final sale is critical. It requires reliable transportation, storage and distribution. This is also important as managing the supply chain plays a pivotal role in driving customer satisfaction. By having the in-demand products available to purchase, the cosmetic company creates a competitive advantage.

Marketing

The cosmetic business is market-driven, making marketing efforts crucial for success. A major supply chain challenge is making sure that the right product mix is available in the right distribution channels at the right time. It starts with forecasting the demand that will determine everything from purchasing ingredients to placement at retail locations.

Reacting to inconstant demand and connecting marketing and logistics efforts requires a great deal of collaboration. Cosmetics companies that plan ahead and encourage marketing and logistics functions to work together may have a better chance at successfully hitting their targets more cost effectively. To this end, marketing should engage logistics on the front end of a campaign, they can then help determine the best way to manage the projections and timing, and not operate in a reactionary capacity.

Vendor-Managed Inventory

Adopting in a vendor-managed inventory (VMI) strategy can help businesses reduce the risk of carrying too much inventory and respond better to changing demand patterns. For example, a manufacturing facility running 200,000 SKUs three months out can be risky, as it carries a considerable amount of stock that may or may not sell. To help overcome this, charging suppliers with inventory management lessens tension by leaving product in its least value-added form farther back in the supply chain. Companies can leverage this flexibility to rationalise packaging requirements for different retail channels closer to demand or even source all inventory from a centralised stock point.s

Packaging

Cosmetics are sold to a variety of retail streams that often have their own specific requirements. For example, larger companies frequently target four markets: consumer products to mass retailers; cosmetic supplies to salons and professional product groups; luxury brands to department stores and boutiques; and dermatological products through dermatologists. These different retailer structures often impose different packaging. In a large retail or chain drugstore, packaging is important in helping a product to stand out. Various packaging shapes and sizes are the industry standard, sometimes even for the same product. Some cosmetics companies achieve this result by implementing packaging postponement strategies. Postponement strategies allows for companies to package items closer to demand, and that can also include specialised displays and promotional features. This allows cosmetic companies to pay more attention to how they can accomplish those initiatives more affordably.

Inbound Logistics

In the cosmetics product supply chain, sensing demand and responding timely is a competitive differentiator. By controlling inbound transportation and product flow at each point in the supply chain, from manufacturing plants to distribution facilities to retail stores, can help businesses meet inventory to demand. Companies are now turning to transportation management systems to help smooth the flow of goods and improve visibility of their supply chains.

Whether a cosmetics company sells to the mass market, specialty retail or via e-commerce, taking these major supply chain considerations into account is essential to ensure a competitive advantage when facing the challenges between supply and demand innate in the cosmetic industry.

What’s the Buzz About Innovation?

May 28, 2018 0 By Xienan Shaw

Equally, businesses that innovate even further will be able to compete strongly – offering shorter lead times, more attractive pricing and unparalleled supply chain reliability. Tools like barcoding, RFID tags, customer specific pricing and integration with other platforms are likely to be the difference between average and high performing businesses over the next few years. Despite having plenty of research into innovation, experts have yet to come to an agreement on what is the best way to encourage innovation in teams.

Here are 3 ways a business can encourage innovation:

Encourage learning

Foster an environment where staff can feel comfortable try new things and taking risks. Let your team try out new ideas, assessing them based on testing to learn and succeed.

Focus on your customers

At the heart of businesses is the customer. Innovative businesses analyse their customers and use the data to identify what their customers want, or could want in the future.

Promote openness

Challenge employees to look beyond their teams or department. This encourages ideas and knowledge to be shared across the business. Some good ways to share information is through teamwork, newsletters and intranets.

The Reluctance to Automate Leaves UK’s Food Industry Stagnant

May 27, 2018 0 By Xienan Shaw

Globally, the food industry is seeing more automation than ever; robots and high performance machinery are taking the lead. They are sculpting new paths for the food industry. However, some competitors seem to be lagging. Looking closer at Europe, countries such as France, Spain and Italy are blazing the way with robotic technology they have implemented. However, the United Kingdom appears to be taking its time to catch up.

How should the food industry promote efficiency?

There are ways to streamline work processes to make them more efficient. You do not need top of the line machinery just to get better results. Going through processes and deciding where automation is appropriate is one way to increase efficiency. For instance, in the UK it is common to see inventory stock being shifted from the shelves or production lines to pallets by hand. This is a prime example of one way their food industry can automate a process with their inventory stock.

There needs to be an overall shift in thinking. Manufacturing and warehouses should not be handling inventory stock the same way that they did 20 years ago. When your competition is implementing robotic measures, it’s time to catch up.

Investing in change

Making these shifts can be time consuming. When you are looking to make sweeping changes across an entire industry it will be a challenging and long process. The UK needs to address changes to their manufacturing processes and the fundamentals of their supply chain. If the UK fails to respond to this need, they will put themselves in a precarious situation against competition.

In order for this shift to take place, companies in the UK’s food industry need to bring the right employees on board. It is imperative to hire forward-thinking, highly qualified and passionate people. They will be the ones who drive the industry into the digital age of manufacturing.

There is an opportunity for this to be a very transformational time for the UK’s food industry. With a fresh outlook and drive to change, they have the potential to outpace competition. Leave behind the old technology and embrace change. The real assets will come in the form of new technology, equipment and employees that can instigate competitive initiatives.

The UK needs to look at what their competitors are doing, predict where the competition is and develop a plan to outperform them.

3 Key Trends That Will Drive Business Success in FY 2019

April 26, 2018 0 By Xienan Shaw

As some of us begin a new financial year, it’s time to reflect on trends from the year that’s been. The 2018 financial year continued the dramatic trend of change that small and medium sized businesses have been experiencing for the last few years. If the last few years are anything to go by, the 2019 financial year is poised to continue that trend of change – from IT to marketing to economic conditions, everything is ripe for disruption. Here are a few key predictions for the year ahead.

Marketing Trends

At the end of 2017, many commentators speculated that marketing would continue to become increasingly personalised in 2018 and beyond. That’s largely a safe bet – businesses understand the advantages of speaking directly to specific consumers. Consumers generally respond positively to more targeted marketing – the result being that each consumer receives content that is relevant to their tastes and interests.

Against this, the social licence for businesses to leverage consumers’ personal information in this way is under threat. Recent privacy scandals involving well known brands, such as Equifax and Facebook, are leading consumers to think more closely about the information they entrust to commercial entities. These are challenging times for marketers – in addition to complying with relevant privacy legislation, businesses that collect personal data need to think closely about consumer expectations and consumer trust.

Technology Trends

More than ever before, financial year 2019 is likely to see the failure of businesses that have failed to move with the times. Businesses that leverage technologies like the cloud, remote working and data science are achieving much stronger results than businesses which work locally and don’t gather detailed performance metrics. For example, food and beverage manufacturers are seeing strong efficiency and reliability gains from using food manufacturing software. Broadly, businesses that avoid technology will need to have a particularly strong point of difference to remain competitive and relevant.

The Internet of Things (IoT) is likely to change the game for many SMEs this year and beyond – providers in many countries are rolling out IoT specific networks, providing a platform for smart machines to talk to other smart machines. In inventory and logistics, the IoT is expected to remove a lot of manual effort – just as with previous innovations such as barcode scanning and food manufacturing software, the IoT is likely to result in significant cost savings for logistics services and improve on time performance.

Economic and Financial Trends

Predicting economic and financial trends is notoriously difficult; although there is some common ground, commentators don’t always agree on the economic conditions that small and medium sized businesses are likely to face. What is clear, however, is that businesses need to be prepared for adverse economic conditions. This is not to say that the current economic boom is likely to turn to a bust; rather, small businesses constantly face a risk that economic conditions will turn and should maintain a healthy focus on efficiency, competitiveness and financial health. Many small businesses are doing this already – distributors are aiming to rein in transport costs, while food and beverage manufacturers are turning to food manufacturing software to reduce high levels of waste. In financial year 2019 and beyond, small businesses should keep an eye on their financial ratios, remain cautious about debt levels and avoid carrying too large a balance of buffer inventory.

Innovation Poses New Challenges and Opportunities in the Food and Beverage Industry

April 25, 2018 0 By Xienan Shaw

Technological advances and changes in food science are presenting new opportunities but innovation is needed if these industry players are to prosper.

There is relatively little risk in trying a new flavour or version of a product. For retailers selling own-brand products, there is even less risk – they can test the product in store and if sales are poor, then they can simply remove the product from the shelf. However, the reality is it is more difficult to be a food or beverage manufacturer in today’s markets. It is a highly saturated market, with fierce competition. Moreover, retailers have driven down prices and squeezed low profit margins. Not to mention the average household spends a smaller proportion of their income on food than they did 20 years ago. Consumers have driven change that seek companies to source ingredients sustainably and ethically, however it has been difficult to pass this additional cost onto their consumer. In addition to this, the food and beverage industry are facing changes in food safety and regulatory requirements that pose further challenges.

Consumer Behaviour

We are seeing technology transform consumer behaviour and expectations. With most people connected to the internet through a smartphone or a tablet, it has enabled consumers to communicate and do business remotely, and now individuals demand food and beverages that match their changing lifestyle. Not only is there an upward trend of demand in healthier foods that promote physical and mental health, there is now a conscious assessment of the impact on your body holistically regarding what you are eating.

Regulation and Food Safety

The food and beverage industry continuously face consumer demand for minimally processed products containing natural ingredients – the “clean label” trend – however, they are still under pressure to maintain shelf life and comply with food safety standards. Companies must put in place a rigorous food safety strategy that evaluates the risk of harmful pathogen contamination (listeria and salmonella for example). There are also rising concerns about the traceability of ingredients and products, coupled by pressure on manufacturers to understand their entire supply chain, to prevent food fraud and unethical practices. It is also important to note that governments and legislative bodies regulate the industry. Take for example the UK’s proposed tax on sugar-sweetened beverages. It is imperative to understand the different international regulatory standards to ensure compliance.

Innovating Today for a Brighter Tomorrow

Today’s consumer has a very busy lifestyle and is often time poor. There is less time to prepare and eat three square meals a day. We are seeing innovative ways where food providers are catering to these changing needs and providing solutions. This can be anything from tasty and healthy home-delivered meal kits, retailers offering consumers the ability to order groceries while waiting for their train, with options to pick up or get delivered, or the rise of industry players such as Uber Eats, that essentially deliver some of the city’s best food options right to your door.

Choosing Cloud Software? Look Out for These Trends

March 28, 2018 0 By Xienan Shaw

Accountants who are looking for suitable cloud software for their clients should be aware of these trends.

Increased cloud storage capacity

Cloud services are becoming the norm for businesses and it is expected that data storage will grow exponentially to meet this increase in demand. A Cisco survey estimates that in 2018, we will have a total global storage capacity of 1.1 ZB – twice that of 2017!

For future-ready businesses who are ready to take advantage of the space, they will be able to store large data sets, perform analysis, harvest in-depth insights to customer behaviour and more. Smaller businesses can also take advantage of the increased cloud storage capacity. An increase in storage means that software providers will offer customised storage options at lower prices.

Cloud Software Integrations and Extensions

Businesses need to realise the importance of linking data sets from one software to another. Even though the cloud software might come from two different providers, the data they share between them is important to the users of both systems.

For example, if a business handles their inventory management in Unleashed Software and their accounting in Xero, the shared data sets will be important to them. It will allow them to track their stock movement, stock value, cost of sale and more within Xero.

Effortlessly sharing data from one cloud software to another combines the workflow across both systems will make work processes more efficient. This also empowers small business owners to manage their own softwares instead of having to hire software developers. They can implement SaaS software without too much costs or complications.

Machine Learning

Unlike artificial intelligence, machine learning refers to a software system’s ability to improve its own internal algorithms to improve performance. As you continue to use the software, the machine keeps learning and becomes more intelligent.

Machine learning helps businesses do things such as automatically sorting billing statements, recommend account codes, and forecast trends. As the machine learns, it will result in better decision making. This allows your business to increase productivity and provide more data insights to understand trends and forecast future performance.

Many large corporations are currently using software with machine learning. While software with machine learning might not be common among small businesses now due to its hefty price tag, it will not be long before it becomes commonplace for SMEs.

Unleashed Software will be at the Accounting Business Expo in Sydney this week so head over to our booth to find out more on how accountants can maintain their competitive advantage in the digital era.

Unleashed Software relies on our great network of partners to spread the word about our great inventory management software. Find out how you can be a Referral Partner or an Implementation Partner today!

Retail Metrics: 14 Essential KPIs for Tracking Your Business’ Performance

March 28, 2018 0 By Xienan Shaw

Numbers don’t lie, so if you find yourself at a loss with what’s happening in your business, one of first the things you should do is look at your retail metrics. Go through your sales, inventory, and customer data to see if you can figure out how you can improve.

What metrics should you look at? That depends. Each retail business is different, so specific measures may be more significant to you than others.

But to help point you in the right direction, here are 14 retail metrics and KPIs to track in your business.

Sales metrics and KPIs

Sales are the lifeblood of any retail business, so it’s critical that you keep a close eye on them. Consider the following KPIs:

1. Sales per square foot

This metric pertains to the amount of sales you generate per square footage of sales space in your store. (Note: this doesn’t include fitting rooms or stockrooms.)

You can calculate your sales per square foot using the following formula:

net sales / amount of sales space

Why measure your sales per square foot?

Retail sales per square foot is a good indicator of store productivity, and it can also tell you if you’re making good use of space and fixtures in your shop. You can use this metric when planning your store layout and merchandise.

Certain stores and industries make their sales per square foot public, which means knowing this metric will help you determine how your business compares with others. Here’s a look at the average sales per square footage in different retail sectors:

Apparel – $336
Specialty retail – $325
Grocery – $510

How do you improve your sales per square foot?

The right sales and retail productivity tactics will depend on your store, but here some general tips for improving your sales per square footage:

Improve your store layout
Have a winning product assortment
Optimize your prices or promotions
Increase transaction or basket value
Train your staff to sell more
Encourage people to stay longer in your shop

2. Sales per employee

Sales per employee is a measure that comes in handy when you’re planning your staff’s schedules and initiatives. You can easily measure it using this equation:

net sales / number of employees

Why measure retail sales per employee?

This metric can help you make smarter employment decisions, particularly when it comes to hiring, rostering, and compensation.

If you want to get more profound insights into your revenue and staffing, go beyond the formula above and measure the revenue generated by individual employees. The easiest way to do this is through your point of sale system. Find a POS solution that tracks sales per employee, and use that data to come up with sales targets and determine who best associates are.

How do you improve your sales per employee?

The best way to improve on this metric is to get your associates to generate more sales. Depending on your store, this may include actions like:

Setting smart sales goals per employee
Investing in sales training
Motivating your staff to perform better

Related: Want more specific tips? Check out our post on meeting and beating your retail sales targets.

3. Conversion rate

The conversionn rate is the proportion of store visits to the number of shoppers who made a purchase. To calculate it, use the formula:

number of sales / total number of visitors

Why measure your retail conversion rate?

Your conversion rate tells you how good you are at turning lookers into buyers. Driving store visits is great, but traffic alone won’t add much to your bottom line if your visitors don’t convert.

How do you improve your conversion rate?

Increasing your conversion rate starts with your employees. Be sure to train and empower your associates to:

Build rapport with customers
Become “likable experts” who can provide product information and insights
Be convincing without being pushy

4-5. Gross and net profit

Your gross profit tells you how much you made after deducting the costs of creating and selling the product. Calculate it using the formula:

sales revenues – cost of goods sold

Your net profit tells you how much you made after deducting your cost of goods along with all other business expenses — including administrative costs, operating expenses, etc. To find it, use the equation:

all revenues – all expenses

Why measure gross and net profit?

Your gross and net profit will indicate whether or not you’re actually putting money in your pocket. Generating sales and revenue is good, but at the end of the day, you need to make money out of those sales.

Tracking these KPIs will help you make smarter decisions in various aspects of your business. For instance, if your gross profit is on the low side, then you may want to look into product sourcing and determine if there’s a way to lower your cost of goods.

Not netting enough profit? Perhaps you should find ways to lower your operating expenses.

How do you improve your gross and net profit?

You can try several profit-increasing strategies in your business. Here are some quick ideas:

Streamline your operations to reduce expenses
Raise your prices
Increase your average order value
Implement savvier purchasing practices
Optimize your vendor relationships

6. Average transaction value

This metric tells you how much shoppers spend on your store on average. To find it, use the formula:

total revenue / number of transactions

Why measure your average transaction value?

This metric gives you a general idea of how much people are spending. A high dollar amount could mean that shoppers are purchasing your more expensive products or they’re buying larger quantities.

You could derive some insights and action steps from this KPI. For instance, having a low average dollar per transaction could indicate that you need to rethink your pricing. Or, it could mean that you have to implement new sales tactics such as upsells, bundles, or other offers to get shoppers to spend more.

How to increase your average order value

Look into upselling or cross-selling. Done right, both tactics enable you to increase sales while helping customers at the same time.

The key to upselling or cross-selling success is doing it correctly and at the right time and place. If you upsell a product that’s irrelevant or if you’re selling in such a way that you’re coming off as pushy, then you’ll not only fail to convert the customer, but you might even lose the original sale.

The #1 rule here is to always provide value. Yes, getting someone to upgrade their purchase or to buy an additional item will benefit you, but the deal must also be advantageous to the customer.

7. Online sales relative to brick-and-mortar locations

This is new metric that benefits omnichannel retailers — i.e., retailers that are selling online and offline.

To measure it, you need to look at your ecommerce analytics and see how much traffic or revenues are generated from locations where you have a brick-and-mortar presence.

For example, let’s say you just opened a new store in Austin, TX. You can measure the impact of your store on ecommerce by looking at web traffic and sales from users in relevant zip codes (i.e., zip codes in Austin and surrounding areas.)

Why measure the impact of physical retail on digital?

Consumers today are increasingly using multiple channels to shop, so you need to get a handle on how your physical presence influences your ecommerce sales. These days, crediting sales to a single channel isn’t enough, when people are interacting with your brand in many different ways and places.

8. Year over year growth

If your business growing? How better off are you compared to your previous years in business? To figure this out, calculate your year over year revenue growth with the following equation:

(current period revenue – prior period revenue) / prior period revenue x 100

Why measure YOY growth?

Continuous improvement is a goal you want to strive for, and the best way to track your progress is to measure your current results against the previous period. This will help you track how your business doing so you can react accordingly.

For example, if you find that you’re falling behind and your business isn’t performing as well as the previous year, then you can strive to change that.

How to improve your YOY growth

The first step to improving this is to figure out why you’re not growing at your ideal rate. If your growth has stalled, then drill down on the reason behind it. Is it the market? Are you failing to keep up with the latest trends? Is a competitor eating up market share?

Whatever the case, figure out the reason and then take the necessary steps to improve.

Inventory metrics and KPIs

Getting your inventory levels “just right” is a tricky task, but it’s completely doable with the help of the metrics below.

9. Stock turn

Also known as inventory turnover, this metric pertains to the number of times stock is sold through or used in a given time period. Calculate it using the formula:

cost of goods sold / average inventory

Why measure stock turn?

Stock turn is a critical metric for determining your optimal inventory levels. If your stock turn is too low, then it means you’re not selling out of inventory fast enough, and you risk carrying slow or dead stock.

However, if your stock turn is too fast (i.e., you’re selling out of the product 4 or more times a year), then it could mean that you’re not stocking up enough, and customers are continually dealing with out of stocks.

How to improve stock turn

It all depends. If your inventory turnover is too low, you need to be leaner with your merchandise and avoid over-ordering products. You should also make it a goal to move your slow-moving or dead merchandise ASAP. Here are some posts to help you do just that:

Dealing with high stock turn? Optimize your stock ordering procedures to ensure that you’re not running out of inventory too frequently.

10. GMROI

Gross Margin Return on Investment (GMROI) measures your profit return on the funds invested in stock. It answers the question, “For every dollar invested in inventory, how many dollars did I get back?”

The formula for GMROI is:

gross profit / average inventory

Why measure GMROI?

GMROI tells you how much money your inventory has made. You use this metric to figure out if your stock is turning a profit. It’s typically measured for specific products or categories because it can give you a good idea of which types of merchandise are worth carrying in your shop.

How to improve your GMROI

To increase your GMROI, ask yourself, how can I get more money out of my merchandise? Accomplishing that can mean:

Increasing your prices
Lowering your cost of goods
Improving profit margins
Improving inventory turnover

11. Sell-through

Sell through is the percentage of units sold versus the number of units that were available to be sold. It’s expressed in percentage form using the formula:

number of units sold / beginning inventory x 100

Why measure sell-through?

Sell through is a great way to evaluate merchandise performance. It also helps you figure out the speed at which a product is selling so you can make the right purchasing decisions.

For example, let’s say you’ve stocked up on a new style of shoes and saw that you’ve sold through 80% of your inventory in just a week — which is unusually fast for your shop. You can use that insight to figure out how much to order so you don’t run out prematurely.

How to improve sell-through

The steps required to strengthen sell-through depends on your situation. A high sell-through rate could mean that you need to stock up on merchandise (unless of course, you’re deliberately trying to sell out of the item).

On the other hand, a slow sell-through rate means the item isn’t moving fast enough, and you need to figure out how to sell more. Should you run a promotion? Mark it down? Again, the right answer depends on your store’s situation.

12. Shrinkage

Shrinkage pertains to a loss of inventory that isn’t caused by actual sales. The common causes of shrinkage are employee theft, shoplifting, administrative errors, and supplier fraud. To calculate it, use the formula:

ending inventory value – physically counted inventory value

Why measure shrinkage?

The last thing you want is to lose product or money to things like theft or admin errors. Tracking shrinkage keeps you vigilant and helps ensure that nothing shady is going on in your business.

How to reduce shrinkage

The right way to deal with shrinkage depends on what’s causing it. If it’s consumer theft, then you need to work on beefing up store security. Dealing with employee theft? Work on hiring the people and setting up procedures to prevent inside jobs from happening. Tightening up your processes also works for admin errors and vendor fraud.

Featured Resource

Vend’s Excel inventory and sales template helps you stay on top of your inventory and sales by putting vital retail data at your fingertips.

We compiled some of the most important metrics that you should track in your retail business, and put them into easy-to-use spreadsheets that automatically calculate metrics such as GMROI, conversion rate, stock turn, margins, and more.

Learn More

Customers

In this section, we discuss some of the top customer-centric metrics to look at:

13. Foot traffic

This one is pretty straightforward. Foot traffic refers to the number of people who walk into your store. You can measure it using people counters and retail analytics software.

Why measure foot traffic?

Foot traffic helps you evaluate your marketing and advertising efforts. For example, if you recently launched a promotion to drive people to your shop, then looking at your foot traffic can tell you whether or not your campaign was successful.

This is also a significant metric for evaluating the success of your window displays.

How to improve foot traffic

There are various ways to drive traffic to your brick and mortar store. Some of our favorites include:

Increasing your curb appeal
Leveraging digital tools such as click and collect, online business listings, Google’s Local Inventory Ads, etc.
Holding events
Driving traffic from existing customers

14. Customer retention

You’ve worked hard to get new customers, so it’s only right that you figure out whether or not you’re keeping them. There are a number of ways to find your customer retention rate, but here’s a relatively simple formula from Inc.com:

((CE-CN)/CS)) x 100

CE = number of customers at the end of period

CN = number of new customers acquired during period

CS = number of customers at start of period

Why measure customer retention?

Your customer retention rate tells you the amount of customers that return to your store. This metric is an excellent gauge for customer service, product performance, and loyalty.

How to improve customer retention

Getting people to come back boils down to how well you manage your customer relationships. Doing that can mean various things including:

Tracking customer purchases and offering personalized recommendations
Developing meaningful relationships through amazing customer service as well as community-building efforts like classes, events, or online groups
Implementing a killer loyalty program to encourage shoppers to keep coming back

What’s next?

There are two things you can do now that you know which retail metrics are worth tracking your business.

The first is to figure out who to efficiently measure these on a regular basis. Formulas are useful, but you’ll save time by automating data and metric-tracking in your business.

Invest in a retail solution with robust reporting and analytics capabilities, so you can focus less on manual calculations and get straight to the insights you need.

Next is to take action. It’s not enough to know your metrics; you need to do something with your data. Use the info that you gain to identify areas for improvement, and then take the necessary steps to level up your game.

Streamlining your Small Business for Greater Efficiency

March 27, 2018 0 By Xienan Shaw

Unlike larger companies that have greater access to significant financial backing, small business owners need to be especially resourceful when implementing effective cost management, operational and inventory control techniques. They need to streamline aspects of their business, so they remain viable even in a fickle economy.

Efficiencies in time, labour, inventory control and running costs can all be achieved through the employment of faster or simpler working methods that streamline your day-to-day operations.

Reduce Overheads the Smart Way

Overhead costs for small businesses can be quite significant. Particularly for brick and mortar establishments that incur rental fees, energy bills and inventory holding costs.

What tasks are you currently performing that contribute to overhead costs and detract from revenue-generating activities? Access these to determine if any of the tasks can be streamlined with technology or by outsourcing to reduce overheads and improve your business.

Look for areas where cost efficiencies can be made. Are you using services that can be bundled to provide cost savings? Voice over internet protocol, or VOIP systems allow businesses to make calls from anywhere there is a broadband connection.

Using a single source provider for communication services such as telephone systems and internet connectivity can help to reduce overhead costs.

Use Technology to Your Advantage

Advances in technology have created numerous tools and applications that improve productivity through automation and are a great way to streamline many business operations.

Cloud computing is an increasingly popular option for business because it is safe, secure, convenient and scalable. Cloud technology is adaptable to any size enterprise and provides a level-ground for small businesses to compete with much larger ones.
Enterprise Resource Planning or Software as a Service systems help businesses to create a solid infrastructure while maintaining operational continuity. There are numerous platforms covering areas of the business such as sales, inventory control and accounting.
Customer Relationship Management (CRM) software helps streamline and automate such activities as customer service, contract management, email marketing and social media. CRM helps to personalise marketing messages to each individual client.
Optimise inventory control by utilising inventory management tools that provide real-time updates and analytics to manage inventory from anywhere, at any time. Inventory management software connects directly to point of sale sites, so that inventory stock levels are automatically adjusted each time a sale is made.
Document management systems function as digital filing cabinets, providing efficient storage and retrieval of documents. While central servers deliver daily backup of important records, long term storage and archival functions.

Outsource

It’s common for manufacturing to outsource various components of production to achieve a significant decrease in assembly costs. There are however, other functional areas of business that can be successfully outsourced such as information technology, marketing, accounting and human resources.

Managing employees can be a time-consuming endeavour for small business owners and technology can help simplify the process of maintaining accurate employee records, tracking hours worked, managing payroll, leave entitlements and reporting employment taxes.

Technology however, is no replacement for the hands-on personal component necessary for effective human resource management. Recruitment agencies and HR consultants can be contracted to manage staff employment, training and where necessary, termination.

Stakeholders

While cutting your costs, can help deliver larger profits and build a strong foundation for the future, the success of any new process or strategy will often be influenced by how your stakeholders respond to any changes. Therefore, it is important, before implementing new activities to understand how each new approach will impact your customers, suppliers and employees.

Correct planning and evaluation will play a significant role in the success of any actions undertaken to streamline your business.

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