Helping retailers increase efficiency and profitability through technology

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November 10, 2015

Overview of Business and Retail Sales

I have always believed that a business is like a three legged stool with:

  1. Operations (your product or service),
  2. Marketing (your current and potential customers) and
  3. Finance (your accounting and management information systems).

A weakness in any of the legs will cause the three legged stool to collapse.  You have the product or service that you believe your potential customers need and I’ll assume you have the marketing strategies necessary to promote your product or service.  My focus is on the third leg (Finance).

Most business decisions are made on the basis of numbers.  The sheer quantity of numbers can be overwhelming, especially if you’re not a “numbers” person.  I believe this is why a lot of small business owners go for the path of least resistance and leave the numbers work to their bookkeeper.  This, in my mind, is a mistake.  If you control the accumulation and manipulation of the numbers you can reap the benefits of the knowledge they can provide.  The accumulation provides the raw data which, with the right tools, can be manipulated to provide the knowledge necessary to better manage your business.

Let’s start by looking at Sales data.  If you are a retail business and use a cash register and accounting software you have, in my opinion, the bare minimum.  You can ring in sales and, at the end of the day, do a “Z” reading for a report of sales (by category), sales taxes payable and funds received.  This information is passed on to your bookkeeper for input to the accounting system.  You have now provided the bare minimum revenue information required by your accountant and Revenue Canada.  Unfortunately, the cash register will never provide you with the crucial management information necessary to operate your business successfully.  Information such as:

  • Comparative sales over a variety of periods.
  • Identification of products that have the fastest turnover
  • Identification of items that are not moving
  • Identification of the most profitable products

To provide you with this management information you must make the decision to computerize your point-of-sale.  I’ll admit that this involves more up front work, but, in the end, you will see reduced paperwork and increased profits.

Next blog post we’ll take a look at inventory systems (Perpetual vs. Periodic) and the advantages and disadvantages of each.

Tags: Point-of-Sale Overview

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