Trim Your Bottom LineTips for a Lean and Strong 2019
New Year’s resolutions are underway, and although the diet fads always begin with a bang, we all know the inadequate endurance of a quick fix, or worse yet, the hazards associated with cutting out too much, too fast. The rules of business (liquor store or not) are no different. Trimming the bottom line on business expenses is like implementing a new health regime, and there is no quick-fix to magically improve your standing, at least if you are looking to play
the long game. There are always expenses that can be cut, but at what cost? Is it at the cost of the customer experience? Or your staff? Or the quality of your product? Just like a fad diet, some cost-cutting can jeopardize your long game, as an unhappy customer will not return, or perhaps not buy anything at all, and disgruntled staff will sell less, or work less productively; both of these scenarios play out poorly in the long run. That said, there are certain savvy business moves that cannot be missed if you are looking to stay lean on the expense side of things, right through to the end of 2019 and beyond.
Before we start looking at what can be cut, we need to take stock in what your store is currently doing to monitor costs. (Or in dieting terms, what are you currently eating?)
It’s essential to have a budget and review it regularly. You need to know where costs are in the first place, in order to know where proper adjustments can be made. Liquor, beer, and wine stores can come in all shapes and sizes, but no matter how niche or large scale you are, how few or many staff you have, or whether you have a proper accountant, there is no excuse for not having a monthly grasp on where your money is being spent.
Here’s a tip: During this budget review, have a spreadsheet of your monthly costs, categorized from high to low. Review each expense, and always keep an eye open for expenses that jump, or costs that can be reduced.
If something is a sitting duck, figure out how to get it sold.
There are some expenses worth keeping an eye on regularly. Remember that costs should be trimmed slowly, as a bit here and there adds up, and will endure over time, whereas trying to slash costs in one area is akin to cutting off your leg to lose 30 pounds fast. Try to keep your cost reduction to a reasonable number (10%) and pull that from a variety of areas, so no single department bears the brunt of the cut.
Bulk deals on products are enticing, but if you are paying to have bottles sit on the shelves and not sell, you are not benefitting from the deal. Know your inventory and know your turnovers. If something is a sitting duck, figure out how to get it sold (staff incentives or sales). A sound inventory is great for the bottom line, and selecting products to match the demographic of your customers will help turnover. Remember that when you are putting new products in your store, you had better be prepared with proper staff training and marketing to ensure the product moves.
Suppliers and Product Costs
inesses like to work with fewer suppliers to ensure better deals and tighter relationships, and others like to have many suppliers to ensure variety and competition. There are pros and cons to both; what matters most is that your approach is working for you. If you are spending too much time juggling accounts with multiple suppliers, (time is money) you might need to cut back. Alternatively, if you are struggling to get the right product from your clique of suppliers, or you feel they are not being competitive with their pricing, you might need to expand your horizons. There are two areas to monitor here: how much time you are allotting, and how much your product is costing.
Internet, phone lines, even the use of paper (go digital) are all costs that fluctuate regularly, but often go unchecked for months, even years, at a time. Firstly, monitor these regularly. Anything with an automatic renewal should be flagged and reviewed before you are locked in for another turn. And do not underestimate the cost benefits to small actions such as turning computers off at night.
Anything with an automatic renewal should be flagged and reviewed before you are locked in for another turn.
Staff smartly (again, another cost that needs regular review) and remember that your employees are your bloodline. This means if you cut them, it is you who will bleed. Be smart with your hiring, actively handle unproductive employees (do not avoid those awkward conversations and commit to developing staff who have areas to improve) and ensure you have the proper blend of staff experience and knowledge on the floor at one time. Remember that retention is best for long-term cost management, as losing an employee and hiring a new one is a painful cost to swallow, particularly if it happens frequently.
Here’s another tip: Should you wish to have an extra face on the floor, have a liquor, beer, or wine rep host a promotion or a tasting during a shift. This adds to the guest experience as well, which is exactly what you need to focus on next.
In the midst of the juggle of managing costs and keeping your store alive and well, at the core of your considerations should be the customer experience. It is here that you find longevity in the health and wellness of your business. If you are running your business with the bottom line at the front of your vision, your customers and your employees will feel that, whether you intend it or not. When the experience for customers is great (not just good, but great) you will manifest repeat customers who are more likely to come in often, spend more money, and tell their friends; all these effects, in turn, improve your numbers. So make your goals “customer experience-based.” And one of the best ways to do this is by investing in staff training. Call on your liquor, beer, and wine reps, send your staff on education retreats to nearby wine regions or breweries, or pay for WSET training. This drives the consumer experience, and the consumer experience drives the bottom line, all the way to the end of 2019, and beyond.