How Do You Create a Retail Budget?
If you’re having trouble tracking your retail store’s monthly finances, you may want to create a budget to get the store back on track and your expenses in check. Budgets are simple things once you have a better idea of how the money is moving in and out of your store. Here’s a quick guide on how to create an effective retail budget for your store so you can take control of your finances.
POS systems can do more than track sales; they can provide you with priceless information on your store’s performance via analytics. Analytics tools will help track sales, expenses, and even create graphs or charts that you can print out. If you want an in-depth look at your store’s performance, analytics tools are the way to go.
Instead of purchasing separate analytics tools or software, the best idea would be to purchase a POS system that already has analytics tools built-in. This will save you money, since you’ll be getting a payment processing, inventory management, and analytics system all in one simple tool. The greater insight you have into your store’s operation, the easier you can craft a working budget that fits your specific needs. Using the right tools for the job makes all the difference in the success of your budget.
Tracking sales is a vital component to creating a budget. If you don’t know how much money you’re working with each month, how can you possibly craft a plan to keep your expenses in check? How do you know if you’re even making a profit at all? Your sales can tell you a lot about your store; what people are buying, which items sell the fastest, and even which times of the day/week/month are busiest.
POS systems are great options for this component of your budget as well. Those analytics tools we mentioned? Perfect for tracking sales on a daily or weekly basis. Tracking your sales will be simple, and you can navigate through your POS system’s interface to access any information you need. Everything is stored within your software, and many POS systems are backed up to cloud storage for added security and accessibility.
Once you’ve identified how much profit (or lack thereof) your store is generating, you can take a good look at your expenses and compare the two. This will be pretty eye-opening, especially if you’ve never done it. You’d be amazed at what the smallest items cost to maintain on a monthly basis. Something as simple as bathroom soap or a security system can add up quickly and take a financial toll on your retail store.
Which expenses are costing you the most per month? Which are fixed expenses, like rent that don’t change on a month-to-month basis? What are your variable expenses, like utility bills that will vary each month? Your variable expenses will be the ones you need to pay the closest attention to, as one bad window can cause something like a heating bill to skyrocket for the month.
You should include a plan in your budget to keep variable expenses in check. If your store has leaky pipes, don’t wait to get them fixed; the long term cost of skyrocketing water bills can far outweigh the cost of hiring a plumber. Long-term expenses should be addressed as soon as possible in order to reduce the overall cost (and headache) associated with them.
Not everyone is an expert in finances, and that’s ok. There are experts available for hire that can help you get your business (and/or personal) finances under control. Hiring a financial advisor can help you identify the financial roadblocks that are holding you back from reaching your goals; as well as help craft a solid plan to get things back under control. Don’t be afraid to ask for help when you need it! It’s better to have help to ensure you succeed than to not have any help and wind up with serious errors.
Marketing likely accounts for a large percentage of your store’s monthly budget, as it should. Marketing is how you reach your customers and attract new ones with your products and promotions, but just marketing to anyone and everyone is not only costly, but incredibly ineffective.
You’ll need to figure out who your target audience is and direct your marketing efforts thus. With focused marketing, you’re increasing the return on the investment you make when you create marketing and promotional campaigns; marketing products and services your customers actually want to purchase and increasing the likelihood of a response to the campaign.
You can reach out to customers with surveys and feedback emails to gain a better perspective of their preferences, or you can use your POS system to track their purchases and learn their purchasing behavior from a first-hand source. Don’t underestimate the power of customer feedback and building customer profiles. How your customers spend their money can tell you a lot about their buying preferences.
The Bottom Line
Creating a budget is pretty much required if you want to gain a better understanding of how your business’s money flows in and out of the store. Using tools like a modern POS system, you’ll have everything you need at your disposal to learn about and improve your financial situation. POS systems are quite affordable and are continuously being updated with new tools and features to help your business run smoothly.