The Company Check-Up

Do you give your business an annual check-up?

Running a retail business can be rewarding yet also very stress full, especially in this economy. One mistake business owners make is when times are good, they tend to let operations stagnate with the excuse "If it ain't broke, don't Fix it". But when the economy slows and business is harder to find, that is when most business owners frantically start looking at what is happening in their business. Out of desperation they begin to explore costs and inventory, they revisit employee policies and desperately look for waste and inefficiency. Remarkably, they will find all sorts of ways to reduce costs and add black to the bottom line. Its what I refer to as kicking the tires. But why do they wait for lean times to take such a serious approach to their profitability.

The truth is that it is these little expenses and wasteful habits that keep businesses from growing and achieving bigger success. Remember the old saying "A penny saved is a penny earned". In a small business it is these collection of pennies that can make the difference. Small businesses don't have the large Cash flows of big corporations to afford the luxuries that the big boys can afford. It is by keeping there operations efficient that they can have success and longevity. Sure you get your monthly statements and you know were you stand. But they don't tell the whole story. They simply present a picture of where you are, based on what you did. But what if you did something different?

In my 24 years as a small business owner I have found that it is wise to follow the same practice with your business as your health. An annual complete physical or Check up is essential to insure that your profits are not slowly eroding away. Check your key monthly expenses, Insurance, Phone, Utility, fuel. have they slowly risen? if so why? what has changed? is it time to get competitive bids or lower the thermostat, or tune the vehicles.

For most small businesses the largest expense is people. Take a good look at your pay rates and your benefit plans. Are your labor costs staying within their designed percentage. Are your policies and operations creating unnecessary overtime. I have found that for most businesses payroll is the hardest factor to control and deal with.

When it comes to inventory, you should have a mechanism to insure that your margins are checked with each delivery. But even the most savvy business owner can't control every piece of inventory, and you can't change prices daily. Inventories get old, they get lost and sometimes even disappear and all of this adds directly to your Cost of sales. Purchasing habits change and and that can have a big effect on your cost. Vender's change policies and personnel, and with that, shipping and delivery can easily increase and erode away profit. Get rid of old inventory even if at cost. It is costing you to sit on your books and you can use the money for new inventory. If your food inventory is turning to waste, find out why and change your buying quantity. If old inventory is unsellable try donating it to charity. They can give you a receipt that will reduce your taxes.

Another area to scrutinize is your internal policies and procedures. All policies are made for a reason but businesses are not static, they are dynamic and in constant flux and change. the policy you made last year to insure quality may be out dated and costing you time and money today. Most business managers train there staff to follow policy and routines. Smart business owners should allow and reward employees to challenge or at least improve policy as the the business evolves.

Don't be afraid to step into the various roles of your business and give your operation a thorough checkup. Spend some time in their shoes. the results will put money back in your pocket, keep your business purring and give you a new renewed vision and interest into the business operation. It may be just what it needs, even if it appears to need nothing.