This is the equation to make more business.
Profit = (Number of products) x (Price of products) x (Margin) - Fixed Costs
Now how can we help you to grow in 2011?
I would firstly like to qualify by saying that predicting what will happen is difficult. Who for example at the start of 2010 would have predicted the Australian economy doing as well as it did, the iPad would be such a hit or that NDD would go? In our own market space we would not have predicted that one of our major competitors would go bankrupt and another one only saved from closure in the eleventh hour or the 64-bit windows would be a standard and notebook sales would be flat. However 2011 has arrived and we need to take the steps to be ready for it.
Let us start with the above equation, which is basic for all business
Number of product
I predict that none of the major standard sale lines in a newsagency will increase in 2011 with the possible exception of magazines, as their sales are very affected by the economy. If the economy improves, expect your magazine sales to improve.
Lotteries also depend on the economy but here I think we will see more competition.
Like any other business, newsagents need new products that sell in 2011. These products are unlikely to come from newsagents traditional suppliers and as 2011 has shown most of those new products will be technology products. Already in some newsagents these products are major lines rivaling newspapers and more profitable too. If you are not integrated with Telco's products in 2010 you need to be in 2011.
Price of product
Too many in my view, look at quantity rather than price! If you want to move into product lines like giftware, you will need to get your pricing right.
What people tell me after installing our software is that they have discovered much by looking through the sales reports. It makes it much easier to find out what people are buying by category so to try to up sell them better products. For example a person who comes to buy a cheap inkjet cartridge can often be up sold to a genuine.
Margin
Too many items now are coming through from suppliers with margins that are poor. Often suppliers sneak them in, you would not notice them without a computer. We have several margin reports that are extremely useful in tracking these items. I suggest that you search by them by family and category as well. For example you can often substitute a calendar from one supplier to another with better margins.
Tobacco margins, I think will go up in 2011. The market will remain constant. However the supermarkets stands and mass advertising of cut-price is now restricted. What I was talking about earlier of competition effectively going. With price being less of the equation now, tobacco sales will depend more on service and availability. Our clients with find our system can provide those good controls as it has been well-tested by the tobacconists who we have installed it into. I am sure our windows program here will be shown to excel in the tobacco marketplace.
Fixed costs
As sure as day follows night, these will go up this year.
The biggest cost is purchases making up about 70+% of the shop’s turnover. One trick here you may want to consider is what about buying with a few of your friends making one big order rather than buying separately and creating many small orders. Here our computer reports will help by giving you your sales reports.
Overall I believe with what we have now much room for improvement just by adopting better monitoring procedures in 2011. In one study we did, in November last year we found in one shop 20% of all the items in the shop sold one or zero items in a twelve-month period. There is an immediate saving just there by cutting into these products.
Plus we have introduced better purchasing reports in 2010. These should be used.
The biggest cost after purchasing is labour. We need to get more efficient. Using technology we can often do more in less time. An example might be just work out what slow machines cost your business. If your software is still on 32-bit windows, you need to seriously consider upgrading to 64-bit. How much does 10-25% of your shop’s time on a computer cost? It is probably cheaper to upgrade then keep it running as is.
Conclusion
I confess that I am optimistic in 2011 and I believe that it is going to be to the ones that use technology the best.
