It’s a distressing time when you must face that one lingering question: how do I stop my business failing?
With the rise of online stores has come a decline in the traditional brick-and-mortar shop. High streets of today seem a lot quieter than those of the past. Where rows of shops once stood, bright with colour and expectation, many retail stores lay bare. Barred shut, shutters down and old sales stickers slowly peeling from the windows.
But some businesses are just not suited for the online world — and some business owners are the same. This means plenty of small businesses still operate a brick-and-mortar storefront, yet we all know the perils of committing to such a business model.
More sales are made online than in person. That is now a fact of retail. Yet, the margin is still fairly small. 51% of people do most of their shopping online, which means it is an almost 50/50 split.
The online boom of the recent decade may have taken business away from brick-and-mortar stores, but it hasn’t annihilated their appeal completely. It is indeed possible to not only survive, but thrive as a brick-and-mortar store in 2017.
It’s just tougher than it used to be.
If the question of “how to stop my business failing” keeps you awake at night, thanks to hardships in the physical retail world, don’t give up. Consider employing these accountancy tips that could help save your store.
Pick the Right Store Location
Dreams and reality rarely go hand-in-hand. Sometimes, grounding yourself is the most important step you can take to owning a successful brick-and-mortar store. Sure, you may have always wanted to open your knick-knack store on the quiet and rustic shores of Dorset, but while it may be idyllic, how is this going to affect your profit margins?
Location is everything when it comes to making money as a physical retailer.
The question of location shouldn’t be about convenience or life-long ambition, but about profitability, customer flow, exposure and rental terms.
With that in mind, here is accountancy tip number one for saving your store from collapse in an online world: open it in the right place.
The best thing you can do is get cold, hard financial data. Shopping malls may be able to offer details on profitability and visitor numbers, but if you can’t get these, it’s worth at least attempting to get data from nearby stores or previous inhabitants.
It’s also a good idea to spend time around the area in which you intend to set up shop. Monitor potential consumer traffic. Look at not just how many people are wandering around, but how many enter other stores and how many fit your target demographic.
Create data records and compile all your research. Compare potential locations with others, look at rental prices and build as accurate a projection of profits as you can. The more scope you have, the better your knowledge base on your chosen area, the more likely you are to see financial success.
Going in blind on a wing and a prayer is a romantic notion, but it isn’t a stable one.
Perform Regular Financial Analysis of Expenses
To run a business, you must have a keen business mind and an eye for detail. The idea that you should ever become complacent is something many entrepreneurs would scoff at, but it’s actually more common than you might think.
Many business owners unwittingly find that they are drastically overpaying on their upkeep costs, purely because they’ve become accustomed to the status-quo.
With a seemingly endless list of things to do, those things that are already sorted and working are often left to their own devices. This includes the cost of rent and bills, loan repayments, business expenses and supplier fees.
Yet, if you leave these costs for long enough, you are almost certainly getting a bad deal.
If you are concerned about the potential failure of your brick-and-mortar store, and more money in the coffers would solve your woes, take note of this important accountancy tip: Perform regular cost-of-upkeep analysis.
Look at your expenses and ascertain whether or not you are paying over the odds. Changing suppliers, switching your debt repayment plans and even moving your store may seem like a hassle when things are ticking along fine as they are, but the benefits to be had are not to be underestimated.
Overpaying on your business costs means you are bleeding money unnecessarily, which has a long-term effect on your profitability and, therefore, your ability to keep the doors open.
Ensure You Maintain Strong Accountancy Practices
The small business owner works harder than most any other person. Longer hours, tougher schedules, more days in a week. Time is not a friend of the retail store director, which means some tasks can be given a back seat in favour of other, more immediate problems.
The issue is that financial management is not an ‘immediate problem’. It is a background task that is so easily forgotten. When you’ve got sales to make, you aren’t interested in recording transactions. When you’ve got stock to take, you aren’t thinking about balancing your expenses account.
Yet, good financial management is essential to the survival of any business. Losing control of your finances is like losing control of a boat. It will keep going for a while, sailing along, but eventually you’ll hit something and, before you know it, you’ve sunk.
Good financial practice ensures budgets are stuck to, bills and employees are paid, suppliers are happy and so on. Bad financial practices can lead to a death spiral of confusion and uncertainty.
There has never been a more prudent accountancy tip than to not let your finances become a secondary task. Controlling your money is crucial to stopping your business from failing. If you can’t hope to manage your money properly yourself, consider investing in support from a small business accountant.
Whatever you do, do not let yourself fall into the trap of forgetting about the financial health of your business.