There’s no denying that managing financial resources is an important aspect of operating a business, and the retail industry is no different. While every retail business differs in size, target audience and product offerings, finances are key to ensuring a business can operate well into the future.
Of course, profitability comes to mind first when thinking about managing finances. After all, without profitability, a business will not be sustained for ongoing operation. But it can be an overwhelming task to manage multiple staff, expenses, target sales and reduce costs, all while achieving profitability.
Whether you are a large retail company with years of experience, or a relatively new starter in the industry, ongoing education is key to managing financial resources sufficiently. The ARA Retail Institute offers educational courses for retail staff at any stage of their career on managing finances and inventory. Join the ARA Retail Institute to find out more on the latest workshops.
How to develop and monitor store sales budgets for profitability
To help you make a profit, you must first understand your outgoing expenses, from employee salaries to cost of stock. Budgeting is a way for you to plan out your expenses, manage these costs and increase profit.
- Preparing sales budgets
Developing a sales budget is a delicate balance with managing expenditure. A key starting point is using existing data and making assumptions as a basis to form projections for your expenses. Reviewing your current performance and data will help you to propose a sales budget.
- Negotiate sales budgets
Once a budget has been prepared it needs to be signed off on by senior management. You may need to negotiate on your budget to ensure that it aligns with organisational policies and procedures, so get ready to share your insights to support your proposal.
- Control sales budgets
A budget is essentially a plan. It sets a benchmark for businesses to make financial decisions and allocate resources. In real life, you need to make important decisions to control your budget and meet your targets. Balance where the business is spending money, and allocate funds for future projects to ensure you have an achievable cash flow.
How tracking and recording can help you to reduce store costs
When you think of managing finances, your fist thought might naturally go to making the most money possible. But reducing costs is another important way to manage finances successfully.
- Control store costs
If you can minimise your costs, you can ultimately increase profits. But reducing costs needs to be properly evaluated, as it might not always be the best option for your business. For example, if you are a luxury goods retailer, customers will view cutting costs on product quality negatively.
- Propose store expenditure
Once you’ve identified the best places to reduce and control costs, the next step is to create a proposal for expenditure. You’ll need to communicate your suggestions in a compelling manner, and be ready to back up your proposal.
- Maintain store accounting systems
You will need to monitor your costs on an ongoing basis. You can do this through manual records, or using a computerised system. Either way, having a well-maintained record will provide you with all the information you need to monitor costs and maintain them to achieve a greater profit.
About ARA Retail Institute
ARA Retail Institute is Australia’s leading retail training provider for both accredited and non-accredited learning programs. For more information, please visit: www.retailinstitute.org.au