Episode 321: Show Notes
Our guest today, Emily Benson, is an expert in everything retail, working for companies like Abercrombie & Fitch and Club Monaco. For those who aren’t aware, 80% of boutique owners go out of business within their first two years – most often because of a lack of education. Emily’s boutique training academy is here to help lower that percentage, offering both beginner and advance coaching to people who want to grow their boutiques. But it’s not only super helpful to product-based businesses; her advice is applicable to service-based babes too, because business is business, right?
On this episode we’re talking inventory, margins, increasing profits and generally making smart business decisions based on the results you are currently getting in your business. So whether you’re selling t-shirts or courses, it’s all about paying attention to your data, customers and trends and we are going to dish out detailed strategies for exponential business growth. So buckle up, take some notes and get ready to learn a whole bunch from the boutique master herself!
Margins Are Everything In A Product-Based Business
The only way to make more money is through margin. The only way to grow is with more money. As a quick reminder, a margin is the difference between your wholesale price and the retail price, but importantly, this is not your profit because all your expenses need to be covered by it too. Keep in mind therefore that marking down your products changes the size of your margin. You want to keep that difference as big as possible, because it gives you more money to play with. Upping your product price by $5 seems a lot to you, but it’s really not a big deal to your customers, who might not even notice! As a general rule, you want your retail price to be three times that of the wholesale price. If the wholesale price was $10, you want to sell for $30. In this way, $10 can go back into buying inventory, $10 can go into covering expenses and taxes and the last $10 can be put into a capital savings account, for example.
The Importance Of Knowing Your Numbers
Many business owners are scared to look at the numbers and it seems to be a problem in our society. They also lack the financial literacy necessary to run a successful business. It is vital to know that inventory management and accounting are two separate buckets of numbers in your business – you need to understand that and what the key metrics are in each. Shopify is a really useful platform for managing the numbers of your business because it gives you various options with POS systems and e-commerce, it calculates your margins and shows you all the sales data you need to move your business forward.
Blending And Tweaking Your Assortment Based On What You Learn From Sales Data
You could be starting off with only one product, but it is often when you add value to your customers, such as offering additional related products, that your profits rapidly increase. A good way of doing this is also just asking your customers for ideas and finding out what they would benefit from in addition to the original products. It’s best to start off with a well-rounded assortment that would attract a diverse audience. You can then begin to consider “sister” or “cousin” products, meaning that, if you have a bestseller, you should go out and look for similar styles to expand that in the assortment. You want to keep to the same theme and not introduce random products that aren’t really related to the existing ones.
How To Manage Your Inventory
Stop buying so much inventory! You only need to take into consideration two factors when you buy new merchandise – how much in sales you are projecting and/or how much inventory you just sold. Many suppliers are able to ship within as little as three days, which gives you enough time to get your orders in and have your goods ready to sell, so don’t buy because you’re afraid that you won’t get the merchandise on time. But at the same time, you don’t want to sell out either, because then you’re missing out on sales. Inventory is one of the trickiest aspects of a product-based business, so it’s about learning as you go until you find that sweet spot.
Margins are everything in a product-based business. [0:04:57.0]
The importance of knowing your numbers. [0:10:03.0]
Blending and tweaking your assortment based on what you learn from sales data. [0:22:14.0]
How to manage your inventory. [0:31:46.0]
Know your numbers.
Ask for help.