There are a number of different expenses involved in running a retail business, and at times this can put a significant strain on your company’s finances. If you’re concerned about your business’ financial situation, there are a range of straightforward steps that you can take in order to reduce your retail expenses. These are our top tips on how to reduce costs in retail business:
Reducing & Eliminating Manual Tasks
Is your business operating as efficiently as it could be? Are there simple changes that you could make to save time, money and effort? There are many different ways to streamline operations. One of the most effective steps to take is eliminating manual tasks where possible. There are a number of digital software solutions that can help with the likes of inventory tracking, invoicing, salary distribution and more. Making the most of automated systems will enable you to reduce the number of staff that you need to employ, whilst saving you a lot of time that can be put into improving other aspects of the business.
Renegotiating With Suppliers
A crucial aspect of how to reduce costs in retail business that is often overlooked is renegotiating with suppliers. If you’ve been working with suppliers for years then don’t be afraid to renegotiate terms with them. As you are an important customer to them, you may be surprised at how open they are to offering a discount, reducing shipping costs or providing the option of making savings via bulk purchases. If you have been using a third party supplier, you may also want to consider purchasing from the manufacturer directly instead. They may be able to offer you a better price than buying from a third party.
Restructuring Operations
When looking to reduce retail expenses and restore financial stability within your company, financial and operational restructuring can make a huge difference. This involves simplifying operational processes in the business, selling or closing down under performing parts of the business, and identifying skills shortages within the team. A big part of how to reduce costs in retail business involves managing your team strategically. Investing time in effective training, and looking at how team roles can be restructured, will have a huge influence on making your business more efficient and cost-effective.
Renting Out Or Sharing Your Retail Space
Another one of the most effective methods for how to reduce costs in retail business is renting or sharing your retail space. If you have an unused area in your retail space that you barely use, you could rent it out to another business owner that isn’t a direct competitor. You could rent it out to another retailer or for use as an office or studio. Aside from reducing the stress of rental costs, you may also find that this helps to bring new customers into your own store. For example, if you own a clothes store, renting part of your space to a coffee shop could help bring in more passers-by.
Auditing Your Inventory Costs
Taking the time to break down your expenses, will provide you with a clear picture of where your business is making money, and where money is being wasted. By completing a thorough audit of your inventory costs you’ll be able to compare the items that are profitable to those that are not, and make changes accordingly. If you notice excess stock items that are not making any profit then you should stop buying them or replace them with useful ones. This is a key part of how to reduce costs in retail business as it allows you to streamline your operations, which will have long term benefits on the profitability of your company.
Increasing Your Online Presence
If you can, it’s highly cost-effective to merge your online and offline shopping experiences. Creating an online store enables you to reduce operating costs in the physical store, whilst increasing your market exposure and ultimately creating more sales. If the online store is a success, then you may even find yourself transitioning into a fully online business. This will enable you to save money that would otherwise be spent on renting a physical space. Another option is to maintain a presence both online and offline, for example by creating a small pop-up store to support your online sales.
What Should I Do If My Company Is Struggling Financially?
Knowing how to reduce costs in retail business will play a big role in helping you to keep your business healthy. However, in the event that you do find yourself running into financial difficulty, it’s important not to panic and to act quickly. Please don’t hesitate to contact our experienced team of business rescue professionals at the first signs of trouble in order to discuss the options for moving forward. We can help you implement an effective business rescue plan that’s tailored to your company’s individual needs.
