Decades ago I attended a multi-day conference centered on the retail industry. During one session the presenter emphatically stated that it was important to our customers that the business be profitable. Although that made total sense to one side of my head, I could also hear the other side pushing back in quiet tones, the number of times customers had asked me for a discount; many times a deep discount. These folks were concerned only about their pockets. They assumed we were doing what we needed to do to make money. We certainly wouldn’t be opening the doors every morning to break even, or worse, to lose money, right?
That is the assumption held by most consumers, that a business has its ducks in a row as they open their doors. The subject of this post may sound a bit silly, but I believe it to be timely and relevant. After working on the retail side of the street for many years, I can tell you this is a serious subject with important takeaways. In this In My Opinion post, I present three thoughts on the subject of running a profitable operation. Although I could write pages on this subject, this is simply a 3-idea blog post:
Educating and training the entire team in the areas of building profit, gross margin, shrinkage, and reducing service errors, is a vital part of a well-planned development program: How deep you dive is based on what you and the ownership want to reveal. It is important, however, for every staff member to know the do’s and don’ts of discounting, membership perks, and other potential decisions made too often in the heat of the moment. Once you and your managers build the pricing model, it is important to educate all on that model, with any freedoms you plan to add.
Building in plenty of margin from the start is essential to growing and sustaining profit: There will be some products and services that members look toward as being negotiable. There are other items on the service menu, the restaurant, and in the golf shop where members appear to be fine with the sticker price. As you work with your leadership team in each area, you may want to set up pricing by item and not with a generic margin formula. I suggest doing spot price checks every quarter, searching for items that require an adjustment, whether it is higher or lower.
The world is certainly a different place: Shrinkage is rampant. Business leaders and their teams are required to be much more proactive with structure and control. The products and other property assets…