Hidden Treasures $$$$ in My Business
Just imagine for a minute, right now you could be sitting on a large amount of hidden treasure $$$$ within your existing business. That’s right, within your existing business structure, we don’t need to go out researching the latest trends, or risk investing large amounts of money in a new idea. You will already have most of the information needed to help you make an informed decision.
Well as silly as this may sound, I want to share with you something that I have actually done, and whilst the example I am about to share will be different to your situation, the simple principles I will go over can be used in any business out there. So, please read the following and follow my steps and you may be amazed at what you will discover.
Several years ago I owned a consumer electronics business in Melbourne Australia, its focus was on main stream Sony television, video and HiFi. An industry notorious for low margins with high ticket prices. The products I sold could be purchased almost anywhere; we survived, sometimes only just. This business like many businesses out there earned me a living, not great, and also employed many specialised staff. Week in week out, we kept doing the same things, because in business isn’t this what the majority of us do.
At the end of each week, I would sit down and reorder the products that had been sold, normally without giving much thought to this process, It Sold Therefore needed to be reordered.
So How Did I Discover The Hidden Treasure Within This Business?
I am sure most of us are driven by cash flow, the more we sell the more we make, sounds simple enough doesn’t it. Yes Cash flow is important, but profit is what really pays the bills, and this is one of the keys to your hidden treasure. So please try and follow me now as I explain what happened within this store.
Time To Start Mining
Large ticketed items, televisions, stereo systems etc represented approx 75% of my turnover, but only 45% of my gross profit $$$. Portable audio and accessories represented approx 24% of my turnover but almost 55% of my gross profit SSS. Large ticket items required specialised highly paid and trained staff, and also because of the sheer size of this product needed large areas of floor space to display and demonstrate. You know how expensive floor space is to rent today, and when combined with highly paid space, and low margin product can be a recipe for disaster. Large ticket items typically returned margins of approx 8%, whilst accessories and portable audio as high as 60-70%
On mining further into these figures, I could see that portable audio also only consumed approx 5% of our floor space, and that the staff selling the majority of this product was not the highly paid senior staff, but a group of enthusiast juniors, that were costing us a fraction of the senior staff.
So What Did We Discover
My existing sales figures showed me, and this is important, because these figures were obtained from my existing available information, not something I needed to pay a consultant to discover. I decided to sit down and mine into my own sales figures. I needed to find out what was generating the most Gross Profit $$ at the least expense from my own figures. With this information at hand I could start really empathising these products within my store.
Guess what happened?
Sales within this area grew dramatically over the next 12mths without any drop off in our normal lines. More importantly, Gross Profit $$$$ increased dramatically, and it was time to go out and purchase my first Porsche, which was lifetime dream, and pay cash for it.
The original business was called Lock’s Sony Centre in Swanston St Melbourne, the result of this drilling and mining became a group of specialised Portable Audio Stores in Melbourne and Sydney called Walkman World. These new stores operated in an area approx 15% the size of the original store, employed young enthusiastic staff and became for many years the most profitable arm of our retail stores. Culminating in the formation of an alliance with Virgin Records on their arrival in Australia into opening Walkman World stores within their Mega Stores.
Drill into what generates the Highest Gross Profit Margin product, group or category within your business.
Drill into how much space is consumed by this compared to other products.
Drill into the staffing costs associated with each of these areas.
Shift your focus to these areas in presentation, training and market exposure.
The End Result Could Help You Get One Step Closer To Your Dreams