Finance - Top Tips - Maximising profit
This document is designed as a quick reference guide to maximising profit.
This will enable you to gain knowledge of a particular skill, task or process.
This means you can quickly find the key information that you need and refer to it on an ongoing basis whenever you need to refresh your knowledge.
Introduction
As a business we need to make profit. People and institutions invest in our company on the amount of profit we are likely to make. The more we forecast to make the more attractive we appear. The more investment we get the more opportunities we have in developing our stores and our business. This then opens up more opportunities for everybody, thatÕs fantastic news for people like you who are looking to further a career with the group. Making more profit is also fantastic news for those who donÕt want to further a career as it gives them the opportunity to smash targets and earn bonuses.
As a manager of a store maximising profit is a fundamental part of your role.
As part of this document weÕll look at how opportunities to maximise profit can be identified through analysing data and insights from your stores performance.
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Logged in as: Adam Bramwell
Finance - Top Tips - Maximising profit
Maximising profit is not always about increasing sales although that is one way of doing it. ItÕs also about being operationally effective, following procedures, keeping within budgets, having the right people at the right time delivering great service to our customers.
We need to consider what elements in our stores affect profit. Start thinking about the things that have a positive effect on the stores profitability? Here are some suggestions:
● Performance management
● Colleague satisfaction
● Stock availability
● Ticket accuracy
● Effective clearance and end of line stock management
● Delivering a fantastic customer experience (GAMES)
● Driving our conversion rates
● Excelling or sales Vs last year
● Driving our average transaction value
● Maximising our trading margin
● Controlling our pay to sales
What else would you include?
Unfortunately for each positive thing that affects profitability there are negative influences also. Here are some suggestions for what they could be:
● Excessive discounts
● Poor/no development of colleagues
● Lack of motivation and praise in store
● Limited stock availability
● Incorrect/missing tickets
● Lack of management of clearance and end of line products
● Poor customer service (not using GAMES)
● Declining conversion rates
● Missing sales target
● Declining average transaction value
● Missing trading margin opportunities
● Incorrect staffing levels/rostering - overtime
● Stock losses
● Poor administration compliance
● Lack of security awareness
What else would you add?
Identifying ways to maximise profit can be kept simple basically we need to increase the activities that have a positive impact on profit and reduce the activities that have a negative impact.
Your stores reports will hold many of the keys to maximising profit in your store. There is a vast amount of additional information that can help you drive profit in your store including your own insights and feedback.
Analysing performance reports, the P+L and the Scorecard is a key method for identifying profit opportunities. Performance reports provide facts and figures on almost anything in our business; these reports are there to drive performance and to highlight opportunities within our stores.
When looking at these reports it is important to find trends as well as where your performance is right now. This enables you to see whether performance is declining or increasing or if there are certain times of day, period or year when performance is different and then you can investigate the reasons why. Look for the biggest wins!
Another useful source that is sometimes overlooked is other stores. We are all working towards the same business goals so why not identify stores that have strengths in the areas you want to improve and find out what they do, in turn you can share some of your good ideas with them.
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