Saving Sally's Store
Like many people, Sally Johnson* spent years dreaming about doing what she loved for a living and being her own boss. Finally, she was able to make her dream a reality by opening her own craft and hobby store. Between getting her store open and ordering inventory, hiring staff and keeping the books up-to-date, attending trade shows, creating educational opportunities and more, Sally soon found herself overwhelmed and in over her head. Quickly facing the reality that running her own store wasn't exactly what she dreamed it would be, Sally closed her doors just 16 months after opening them.
While many facets go into keeping a business strong, Sally made three large--and, unfortunately, common--mistakes that greatly factored into her store closing. Had she followed the solid advice from successful retailers and business professionals in this article, she may have avoided these mistakes and still be in business today. Read on for the helpful input of real-life retail experts on how to avoid the mistakes
Mistake #1: Sally moved forward without a plan.
Sally believed her enthusiasm for crafts and hobbies, paired with her long-time experience as a consumer, were enough to get her business off the ground, so she didn't set an overarching strategy or plan. Her initial opening was successful, but within a few short weeks, sales waned. Trying to make up for slow sales took her deeper and deeper into the red, and she found herself trying to make up.
"I've been a retailer myself," Wagner says. "I found that my best wasn't good enough, and, as a result, my cash flow and sales kept spiraling down. I had to get a strategy to survive, and so I did. It worked beyond what I could have imagined."
Take time to set a long-term, overarching strategy/business plan to use as a guiding point for your business through strong and lean sales times.
Spending your days surrounded by items and experiences that you love sounds wonderful. But keeping your store profitable isn't always as easy as you hoped or dreamed it would be.
"No one opens their store planning to run it by the seat of their pants, but this is often exactly what happens," explains Cathy Wagner of RETAILMavens. Wagner, who's consulted with hundreds of retailers, believes that many are trying to get by in business by "doing the best they can."
An overall strategy will include planning for, and lessening the effects of, slower sales times, giving you options to keep your momentum--and time to gain momentum when your business hits an all-time low," shares Christian Kratsas, digital marketing manager from SnapRetail. "It's up to you to evolve with your customers' purchase decisions and habits."
To write up your business plan, consult with a business consultant or visit the local small-business group center near you.
Mistake #2: Sally didn't manage her inventory well.
"One of the perks of owning your own store is filling it with fun products you love," Sally believed. With that in mind, she purchased products she wanted for her store, certain they'd sell like hotcakes because her customers would love them as much as she did. But she soon discovered not all her customers were as enthusiastic about the products she picked as she was, and those that did sell only sold a few units out of the dozens she'd purchased. She ended up taking a loss on most of the products and wondering where she went wrong.
Purchase merchandise for your store based on impersonal data rather than your personal preferences, and make purchases modestly.
"As a rule of thumb," says "The Retail Doctor" Bob Phibbs, "keep your opinion separate from what you believe will sell." Objective standards for purchasing can give you a good indication of what products will sell. Some components of objective standards include:
Make plans for purchases with that data in mind. But even if you believe products will sell based on your objective criteria, don't purchase too much. "Do yourself a favor and avoid buying too much merchandise because it will be your money sitting there staring back at you every day when it doesn't sell," Phibbs says.
What your customers like
What products have already sold
What your customers have asked for
Mistake #3: Sally didn't display her merchandise effectively.
Sally believed that stocking her store with great products was all she needed to attract customers and get sales. Her product displays made perfect sense to her but weren't always eye-catching or inviting to customers. She was confused about why customers weren't buying up products quickly and her sales sagged.
Create visually engaging product presentations that draw customers in and turn great products into great profits.
"Having great products alone won't keep your doors open," says David Nawrocki of Retail Studio Effect. "You need to make sense of your products within your store environment so that your customers understand them and, ultimately, want to buy them. Presentation of products is key."
Retail experts Rich Kizer and Georganne Bender say that it's common for retailers to get so involved in running a business that they miss opportunities to present products in ways that pique customers' interests. Look at your store through your customers' eyes," they advise.
Note what a customer sees in the first 10 seconds of walking in the door, and notice which displays seem more effective at drawing sales, as well as which ones are least effective. Then adjust as needed to ensure your product displays are eye-catching and make customers stop to check them out further.
By following these useful tips from successful retail experts, you can avoid the pitfalls Sally Johnson encountered to make your business launch successfully and be successful for a long time.
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