Recordkeeping is the most important aspect of retail
There are numerous kinds of retail stores. This ranges from E-commerce and mailorder to physical shops, catalogues, pop-up shops and so much more. Your business may operate around more than one of them. It really depends on what kind of product you are selling.
Wise retailers are aware that success is not just selling a lot of products. There is a lot more to it such as advertising, marketing, keeping records of stock, conducting market research and education ensuring the customer is satisfied with your product & service.
You also have to face seasonal spurts; one season may be a peak season such as Christmas time and another time period may deliver flat sales. You need to make sure that you are keeping record of these sales patterns and using them to market your products and also for planning purchases.
You need to see the accounts, the business cashflow and so much more and it is crucial that the financial situation of the business is administered and recorded accurately with no room for error.
It is extremely difficult to run a business that is successful and maintain an error free accounting record, this is where you will require an excellent accounting software.
Planning is important
You may believe that you have everything figured out in your head and you have a head start in the market, however, it is still a sensible idea to plan your business before you get started. Here are some important aspects to think about:
- Choose the structure of the company. All businesses differ in terms of legal structure and all structures come with their pros and cons. You need to review your needs and future plans to see which structure suits you best
- Location, location, location! Will your products be sold online or will you have a physical store? Where will you advertise the business? On Amazon or eBay? Anywhere else? Even physical stores need an online store. It's called social media marketing!
- How will the business be funded? You need to make a careful calculation of the capital that will be needed for the business and how you will acquire that amount. You may make use of accounting software to help you out with forecasts
- Focus on inventory management. This is a really big challenge and if you go wrong you can face a huge loss.
These are some points to include in your plan. Try speaking to shoe in similar retail businesses such as yourself and get more information.
Can retail software be of any help?
Immensely! That’s the answer. This software will provide you with hundreds of tools to make operating your business simpler. Here are some you should consider before purchasing the software:
- Is this specifically designed for retail? Each industry has its own software, you need to make sure this one was designed for retail purposes.
- How many people can login to it? Can it be accessed by my manager? Do they charge extra for extra staff logins?
- Is it limited to simple payroll? Or does it include tax too? If it manages payroll as well as invoices, life will be so much easier!
- Does it record inventory? Not all software do so make sure you clear that query.
- Is it cloud-based? This means you and your bookkeeper can access the financial situation of your business from anywhere and keep track.
Just make sure you keep your bank details and tax information confidential and safe with strong passwords!
Retail definitions can be difficult to understand
Some of the retail terminology can be difficult to keep up with, you need to educate yourself and make sure you're on top of the “retail lingo”.
- Weighted average of cost
- FIFO (first in, first out) inventory tracking
- LIFO (last in, first out) inventory tracking
- Retail inventory method
- Accrual accounting method
- Cash accounting method
There are also many accounting terms that only accounting professionals understand and they have long definitions. You need to ask your bookkeeper to educate you.
Here's how to make the best use of your accounting software
Using your accounting software to its full potential will be a blessing for your business, here are some ways to use it.
- Use it to record all transactions. It's impossible to manually record every transaction of your business, money in, money out, staff payments, taxes. Make life easier and let the software do it for you.
- Check and check again. Check all your transactions regularly. Either do it yourself or get your retail bookkeeper to do it for you.
- Compare the difference between sales and payments. This is your profit and loss and you need to keep a keen eye on these values.
- Stay alert of tax information. Check the ATO laws every year regarding the taxes from wages that may need to be paid. Make sure it's stored securely.
- Define ledgers/accounts. Make sure you setup the correct accounts in your software. Ask a bookkeeper to help
- Keep ledgers up to date. Record your sales, purchase, payroll regularly. These are records you need to maintain regularly
- Ask outsiders. Ask someone else to view your accounts, they will be able to identify shortcomings
- Get regular reports. Use the accounting software’s powerful features. The best software options will help you understand how your business is running by generating useful reports
- Keep receipts. Invoices, receipts and suppleir bills are important, keep them safe.
- Keep business accounts separate from personal accounts! Business and personal shouldn’t mix, having a separate account will make the business financial situation clearer!
- Don't forget tax returns. Keep on top of all your ATO deadlines for tax returns, BAS lodgements and employee tax reporting. See the ATO website for details.
- Keep an eye on your cashflow. Cashflow is the most important aspect of a business. Make sure to keep a keen eye on it in order to avoid any losses.
Stay up to date with trends
Retail business operations are changing rapidly, this can be credited to cloud-connected smartphones and tablets. Now, your customer expects more of you and sooner than before otherwise they will visit another shop.
Here are some trends that may be hitting retail businesses sooner or later;
- Presence of the business on mobile and internet. Use social media and the internet. It’s the most low-cost channel of marketing.
- Create an app. Remember when eBay launched an app? It was huge. Try it!
- Be listed on GPS and online maps. So many retailers are located on GPS systems. Make sure you're not left behind.
- Self-checkout is efficient. It’s quick and easy and highly popular in supermarkets and it’s a matter of time before retailers introduce it too.
- Let them buy using a mobile app. They select their shopping on an app and the sales man just goes and finds their items.
- Price comparisons mean savvy customers. Be competitive; everyone is using these websites which tell you what the cheapest product is and where.
- Pop-up shops are goanna become big. Carts and “on wheels” kind of branding will become highly popular due to their low cost and less expensive factors.
Keep up with the competition
Consumers are not the only ones benefiting from technology. Smart retailers are also incorporating technology into their business to make it more successful. Choose the right software to do the difficult work for you. This kind of software are automated and can do your tax, inventory and payrolls automatically. They can even be used to draw up tax reports.
The right accounting software will allow you to keep your finger on the pulse of your business, and make the adjustments you need to be successful!
If you're not sure where to start, have a look at our thoughts on MYOB and Xero. At Eye on Books we have more than 11 years in helping Perth small business, so tell us about your business!