5 Ways to Improve Store Budgeting
Retail stores, and retail chains, are profit centers. In order to turn a profit, you have to shell out money for expenses — overhead, merchandise, payroll, and more. In order to manage the operation successfully, you’ve got to set store budgets.
Retail budgeting is about more than reconciling profits and expenses. You’ve got multiple tiers of your operation that need budgeting. You’ve got the chain, regional offices, and individual stores. You may have different departments. Each piece of the chain needs to budgeted in addition to the entire operation.
Follow these five best practices for successful retail budgeting:
- Develop a multi-tiered end-to-end visibility strategy – It’s not just about one store or the entire chain. It’s about both. You need to budget each piece of the operation as well as the entire operation. That requires strategic thinking.
- Simplify your processes – There’s no reason to complicate things. Keep it simple. Of course, you can simplify too much. Your retail operation has complex moving parts, but you can simplify processes to make them easier to manage and your stores easier to budget.
- Focus on key performance indicators – To maintain a healthy retail budget, you need to focus on sales and performance. Not only that, but you should work on increasing your sales while managing expenses. Keep an eye on all of your key performance indicators, and manage them from the inside out.
- Reduce expenses – There are two ways to impact your profits. First is to increase sales. The second is to reduce expenses. If you do both, you’ll maximize your profits and improve your budgeting processes all around.
- Analyze your reports accurately – In a multi-tied operation with many complex moving parts, you’ll have a wide array of variables that can affect your budget. Make your analytics graphical so that you can see at a glance what is impacting your bottom line. With detail reports and accurate analysis, you can focus on the details that matter.
Store budgeting is not rocket science, but it’s not a simple exercise either. With the right tools, you can get it right in less time.