Management tip

Newsagents, and just about any small business retailer, often complain about rent. Many who do complain do not know their occupancy cost. This is the ratio of rent to product sales where product sales include agency commission.

Knowing your occupancy cost is key to every discussion you can have on rent.

Here is the advice I have provided previously on occupancy cost:

Occupancy cost: between 9% and 11% of revenue where revenue is product revenue plus commission from agency lines. Location and situation are a big factor in this benchmark. For example, a large shopping centre business will have a higher cost than a high street situation.

When you order stock, consider being specific about when you want stock delivered. Group deliveries together, so that you may roster the business to make for the most efficient arrival of stock.

If you leave it to suppliers you might have stock arrive each day of the week when a more efficient solution could be to have two days set aside for processing this.

Depending on your competitive situation, you may want to leave deliveries coming as they are and only process the new stock on set days.

I appreciate the value of new product hitting the shop floor every day. However, managing the business for efficient use of labour is key given that labour is usually the second or third biggest operating cost for any retail business.

One option is that you arrive the stock, price it and have it ready for shop floor display on the day you nominate.

Every day in a newsagency, or any retail business, the owner or manager is interrupted by people who should not have easy access. Some do it because they know the can term their way to some business with most the interrupt.

Here are some ways to reduce these interruptions, if you do want to reduce them:

1. Stop answering the phone. Have someone else do it and take the calls you want. If you have no one to answer, consider using a machine to vet calls.
2. Have a no appointment no meeting policy with all reps.
3. Black list emails from suppliers you don’t want emails from. You can do this through your email server.
4. Put all unsolicited marketing mail into a separate pile for you to review at a time that suits.

Reducing the noise from and attention grabbing by unsolicited reps and businesses can de-clutter your time and this could help you focus on what really matters to you in your business.

Plenty of newsagency supplier representatives will have an opinion on shop layout, fixtures and related topics. While these opinions can be useful, they need to be considered knowing the retail experience of the person and their core motivation.

Shop layout and fixtures are changing rapidly. Unless you are actively invested in retail businesses yourself, your perspective may not be current or useful to those being asked to make the investment.

The best advice is that which you can give yourself, based on your own business data and your own retail skills as well as that which you can access from any retail management or marketing group of which your business may be part.

Giving a prospecting employee a trial shift is a good way to assess their value to the business. Too often, however, trial shifts are not structured to challenge the candidate. My advice today is that you structure a trial shift, always make it the same, so you can reasonable access the value of the candidate.

Here some tasks you could set for any candidate during a trial shift:

1. Create a basic product display. Clear space, give them the products in a box. Explain what you are looking for in terms of outcome. Get them to do the display. be sure to leans some tricks in the box. For example, a damaged product, products without pricing, signage that has nothing to do with the display.
2. Vacuum. Show them the vacuum cleaner and ask them to vacuum the floor. Their attention to detail will be telling.
3. Their observation. At the end of the shift ask them to list the top three things they think should be changed in the business. Their response will demonstrate their observation skills as well as their preparedness to actively contribute.
4. Mystery shop. Have someone they don’t know shop with them and throw up some challenges. This mystery shopper should assess the experience.
5. Serving. At a busy time at the counter, leave them alone for a moment to see how they react.

A well structured trial shift is a terrific way to access the suitability of a candidate. The key is to have a process you follow each time, to know the criteria you will use to assess their suitability.

Footnote: always pay candidates for trial shifts. See what FairWork has to say.

If you want to quit stock, quit it, quickly. Quickly means different things to different people. I think it means 7 days … gone and out of the shop in 7 days from when you decide to quit the products. Of course, this will vary based on your own local circumstances.

The easiest way to quit stock is for your shoppers to understand the deal. Understanding the deal starts with how you brand the sale.

A sign with SALE on it could mean anything. Do NOT use this. There are too many around, each meaning a different thing.

A sign with, say, 50% off could be confusing as they don’t know the starting price and some may not understand percentages.

Sign with HALF PRICE is more easily understood but they still do not know the starting price.

If you really want to quit stock, I suggest you have tables or dump bins at price points: $1, $2, $5 – or that ever is appropriate to you.

I tried a $9.99 priced at 50% off, half price and $5.00. The $5.00 pricing worked the best, by far.

This is my recommendation on quickly quitting stock: get the price messaging right.

If your price messaging is hard to understand or if there are too many different price messages you could be creating a barrier and this could stop you achieving the sales outcome you want.

It is not enough to backup trading data from your computer system. No, not need to backup everything on which you may rely on all computers in your business.

A retailer recently lost their hard disk drive and only had a backup of the data managed by their POS software. They lost everything else.

With professional cloud backup it is easy to ensure all data is backed up. Do it.

There have been many reports about Amazon opening distribution centres in Australia, with the first, in Dandenong Victoria, well advanced in preparation.

Little advice has been provided to small business retailers on what is needed to compete in this ever evolving online-focussed world.

At this workshop I in Sydney later this week will share insights from the various retail store connected websites with which I am involved. I will show the data: when, hope and why people shop. I will take you under the hood, back to what they search Google for.

I will explain steps you can take in your business to win business that Amazon sellers m might otherwise try and win from you. I will also share details of experiences overseas, from small and independent retailers.

I will show how you can get online in any type of business, without breaking the bank and without needing your own tech employee. Plus, I will answer every question you have about these topics.  Without obligation.

Book now. These workshops are free. All welcome.

• August 24, 8am. Figtree Conference Centre: Mission Room, 5 Figtree Drive, Sydney Olympic Park NSW.
• August 24, 11am. Figtree Conference Centre: Mission Room, 5 Figtree Drive, Sydney Olympic Park NSW.

I will demonstrate live websites connecting to newsagency businesses with POS software. I will also show how to transfer stock to a website and how to manage images.

I’ll set dates for Adelaide and Melbourne in a day or two. This is an update to a session I first hosted several months ago in NSW and QLD.

There is a risk in inviting people to review your business on social media. It is easy for a competitor or someone else who wants to damage your reputation to rate your down with a false review. It can be tough to recover from.

Since there is usually no verification mechanism for a review on, for example, Facebook, I think it is best to turn off the review option, thereby removing the opportunities for those who want to harm your business.

The opposite is true too. I have seen new businesses with hundreds of positive reviews within a day or two of opening. I doubt the accuracy of the reviews.

Facebook offers you settings on your business Facebook page that enable you to mute offensive words. I suggest you check k your settings and ensure they are what you want for comments on your business Facebook page.

I saw a post recently where a business promoted new products just arrived in-store. Someone commented that they liked them and in one sentence used the ‘F’ word. They meant it in an excited / happy way whereas others reading it could see it as a swear.

With the right Facebook settings the ‘F’ word would never make it as a comment, thereby reducing the opportunity for someone else’s comment offending a reader who could be your customer.

Cashflow can get very tight in any small business. How you deal with it is a test of leadership.

The common approach is to hide from those to whom you owe money. That only serves to harm your business and put you under more pressure.

Here is our practical advice on how to deal with a cashflow challenge:

1. Understand the problem. Know if it is short term or long term. Be certain about the role you have played.
2. Own the problem. Fixing this is on you.
3. Develop a plan and document it succinctly:
   1. To borrow if appropriate.
   2. To put more of your own money into the business.
   3. To cut overheads: labour, rent.
   4. To convert more stock to cash.
   5. Work our what free cash you have availabke from your weekly trading.
   6. Ensure all creditors receive payments, no matter h0ow small. Regular payments reflect your commitment to goodwill. They also show you are not playing favourites.
4. Talk to your creditors, apologise, outline your plan, ask for help.
5. Act. Every decision, every action you take must work to addressing the cashflow challenge. If you have created a plan(point 3 above) act on it immediately. This is not a time to overthink things.
6. Invest. If your cashflow challenge is because of a decline in traffic, not spending money chasing traffic will only make the problem worse.

If your cashflow challenge is more serious than a short to medium term plan could resolve it could be that your business is insolvent.

Company directors have a legal obligation to not allow their businesses to trade while insolvent.

Many have been in this situation. You can come out the other side by acting sooner, with commitment and with transparency to your creditors.

Too often I see the mistake of retailers not understanding the real costs of a product category because they to not allocate labour costs to a department, category or supplier.

Do this at a high level and you should be able too understand what you are really making from that product category or supplier.

This is the approach used by newsagents with deliveries years ago when they started selling off their territories. You can use the approach for lotteries or other agency like products and services you offer. However, I’d focus on the big ticket items.

Sure there is a management cost to get to this analysis. Th result is a better understanding of the real value of a product c category and / or supplier.

I heard of a someone doing the rounds of newsagencies in recent months selling gift items from the boot of their car. During the pitch claims are made and promises given. The claims sound too good to be true. They were. Newsagency have been left with stock that does not sell, products that are not as good as the slick sales pitch made them out to be.

My advice? Never buy from a sales person from whom you have never purchased previously, who walks in, unannounced, selling goods from their car. 

If you want to quit stock, quit it, quickly. Quickly means different things to different people. To me, this think it means 7 days … gone and out of the shop in 7 days from when you decide to quit the products.

The easiest way to quit stock is for your shoppers to understand the deal. Understanding the deal starts with how you brand the sale.

A sign with SALE on it could mean anything. I suggest you NOT use this.

A sign with, say, 50% off could be confusing as they don’t know the starting price and some may not understand percentages.

Sign with HALF PRICE is more easily understood but they still do not know the starting price.

If you really want to quit stock, I suggest you have tables or dump bins at price points: $1, $2, $5 – or that ever is appropriate to you.

I have tested this. I have tried $9.99 priced an item at 50% off, half price and $5.00. The $5.00 pricing worked the best, by far.

This is my recommendation on quickly quitting stock: get the price messaging right.

If your price messaging is hard to understand or if there are too many different price messages you could be creating a barrier and this could stop you achieving the sales outcome you want.

Also: display the product for a sale. i.e. not pretty. Reorganise it daily. Keep it separate to the premium merchandise.