If your store is experiencing high sales and low profits, you may need to re-evaluate your profit margins. Profit margin measures a retailer’s profit after subtracting cost from how much you sell the item for, if this number is positive then you are making money. As a business owner, you always want to maximize your profit margins so that you can maximize your revenue.
If you find yourself having little left in your pocket after cost on top of business expenses, here are 5 tips for increasing your profit margin and reducing expenses, according to Tony Robbins:
By raising your prices, you are able to widen your profit margins, but we know that increasing prices can be scary. Many retailers fear that they will lose customers if they hike up their prices, but at the end of the day you have to make the best decision for your business based on the numbers. You can also find a sweet spot in raising your prices that is large enough to make a difference in your margins, but small enough to prevent customers from choosing other options. During times of inflation, price increases may be necessary to keep your business afloat, learn more about combating inflation in this goEBT blog.
Check in on your inventory – past orders and present. Look to see what you have in excess and if there are any trends to products that don’t sell as well as others. This will allow you to re-evaluate what you order to make sure you aren’t left with a surplus of inventory in the back that takes up storage space, that you will end up having to discount, or even get rid of. When you evaluate your inventory, you can also see what does sell well so that you can buy more varieties and options of these products.
Optimize and automate your business operations to cut down on things like staffing costs. Check in on the schedule and productivity levels to ensure that you have the right number of staff each shift – not too many or too little to optimize staffing costs. Another idea is to find new revenue streams for your business, an example of this is becoming a SNAP retailer. Adding EBT to your profit streams is a great way to increase revenue for your business, check out goEBT’s free EBT resources to get started today.
Cut back on unnecessary expenses and get back to basics for a bit. Consider going back to cheaper bagging and packaging options for example. Retailers should also check in on waste, as mentioned above in the inventory section, what are you throwing out at the end of the month? Are you losing money on waste? Where can you cut back? These are a few questions you should ask yourself when trying to find areas where you can reduce your expenses.
Motivate your staff to do more, when you have an incredible team, your business will see the results. Productive employees allow for positive customer experiences, which will continue to bring customers through the door. You can also encourage employees to promote specials that are going on in your store like sales or deals in effort to get people to purchase more product.
Learn more about adding the additional revenue stream of EBT with goEBT’s free EBT resources