As a retailer, you know that your success involves more than simply exchanging products for money. You have to be an expert in customer service, stock control, marketing, advertising, and more. And then you have accounting.
A retail business is unique in a few ways. You have to stock a large amount of different products to be successful, you have money coming in and out all the time, and you may experience seasonal rise and fall in traffic to your stores. This makes tracking every cent your business handles important. Here are some tips to help you do that.
Track Cash Flow
With money going in and out of your business in multiple directions, it can be hard to tell if your retail business is profitable from the surface. Keeping track of cash flow is critical to knowing where your business stands and the right accounting software can help you manage this. Accounting software will help you get a handle on accounts payable, accounts receivable, and whether your business is in the black, but you have to do the bookkeeping on a regular basis.
Manage Your Inventory
As a small retail store, you may be working with limited resources. Because of this, you have to manage your inventory carefully. You probably can’t afford the loss of your goods through expiration, theft, or damage, but keeping the right amount of inventory in stock at all times is just as important to the profitability of your store. Empty shelves translate into lost sales, and overstocking means potential cash flow is locked up in inventory.
This is another place software can help. A good retail inventory system can keep track of sales trends for you, make sure products are on the shelves when they are needed, and ensure they don’t stick around long.
Prepare For Seasonal Fluctuations
This especially applies if your store is in a seasonal location or specializes in seasonal products, but it also can apply to retail businesses that specialize in gifts and see an increase in sales during the holiday season. It can be challenging to balance inventory with seasonal fluctuations, but you have to stay ahead of the game.
Keep up with trends in your industry and plan accordingly to make sure you have enough of the right inventory at the beginning of your sales cycle. Also, plan your end-of-season discounts so you aren’t stuck with excess inventory when the cycle ends. You may also want to modify your return policy so you don’t end up with a lot of returns at the end of the cycle.
Hire An Accountant
When you first started your retail business, being your own bookkeeper may have been a good way to bootstrap it. But if your business is growing, it could be time for a change. Outsourcing your accounting can help increase your efficiency and maximize profits. You can put your finances in the hands of professionals with years of experience in the accounting field while you focus on what needs you the most: your business.
A simple way for small retail businesses to get started is with annual tax preparation. Tax season can be stressful, and tax accounting tasks can take up most of your time if you do them yourself. But if you really want to see how outsourced accounting can help your business, consider monthly accounting services which can provide you with financial statements, audit representation, and ongoing advice.
At PABS, we have been helping retail stores by providing meaningful financial analysis and proven business insights that help them grow. Learn more by giving us a call today.