Homework for Retailers 2: Budgeting

 

Getting Ready to Reignite your Business

Right now, the UK Government is making noises about coming out of lock down has promised more news of measures businesses might need to take to prevent a second wave of Coronavirus.  There’s a hint of optimism in the air and right now, it’s time to knuckle down to the business of preparing to re-open your shop.  We may not have a full picture of timelines from the government yet, but a plan to reignite your business is essential if you’re going to make a success of the rest of the season.

 

Step One: Cashflow 

Last time, we showed you how to get to grips with cashflow  and it’s important to review this before you think about moving onto budgeting.  Getting to grips with your costs means there’ll be fewer shocks down the line and you’ll be able to move forward with realistic expectations.  While the shop is shut, you still need to appreciate which payments are leaving the business and, if you followed our earlier advice, you’ll now have a better understanding of your outgoings and a clearer picture of your business.

"Getting to grips with your costs means there’ll be fewer shocks down the line and you’ll be able to move forward with realistic expectations".

Use the cashflow Excel template we designed for you to keep track of income, outgoings, overheads and PAYE.  Staying on top of the business is as important as ever right now and this template will help you stay ahead of the game.

 

Step Two: Budgeting

Where cashflow focuses on costs, budgeting is about ‘sales’: and a good understanding of what you’re selling each month will really get you thinking. We are a few months through the year but this doesn’t mean it’s too late to think about creating a budget. In fact, it’s more important than ever to plan for the rest of the year so that you have a clearer idea of how things will look by the end.

Around 80% of pro shops still fail to create an annual sales budget, and many retailers still do not appreciate the importance of working with one.  When you’re running a busy shop, it’s easy to get absorbed in golf lessons and dealing with customers, so now is the perfect time: no excuses!. Putting a budget together needn’t be time-consuming or difficult. Keep it simple at first, by looking at what you do each month, how much you make, and aim to increase that by around 5% each year.  A budget will help you manage the business and take some of the stress away.

"It’s more important than ever to plan for the rest of the year so that you have a clearer idea of how things will look by the end".

If you haven’t used it before, open up the easy budgeting calculator tool we’ve created for you. Its live calculations will make everything quicker and easier.

 

Reality Hit

Run off the Monthly Sales Analysis Report for January to the current month in XPOS. This will tell you how successful the shop has been, in terms of sales, so far this year.

Use the information in the report to fill in the blanks in the budget tool and it will calculate the rest for you. If you’ve been selling stock through an online channel, make sure you include these figures. The results might be more positive than you expected.

[You can access this report in The Hub, as well. Go to hub.crossovertec.co.uk and login with your usual details, or create a new account.]

 

Clear Comparisons

Monthly comparisons against the same months last year are key to giving you that clear picture of the business.  Run the Monthly Sales Analysis Report again, this time for January to December 2019.  This will tell you what you did last year and the best and worst months.

• Compare each month of 2020 against the same period last year. Clearly March, April and May will be badly affected, but what about the first 3 months?
• Now you need to plan for the rest of the year. How much will you have to increase, per month, to make up for the lock down losses?

"Try to be as optimistic as you can and perhaps aim for 12-15% increase in sales in the budget tool".

• Use the Report to examine turnover and margins. Turnover may be down this year so try to come up with a plan to improve margins, incuding trying to avoid discounting as much as possible.
• Where did you go wrong last year? Look at last year’s numbers and try to think how you can get these back. Be braver in your budgeting from June onwards. Try to be as optimistic as you can and perhaps aim for 12-15% increase in sales in the budget tool.
• If possible, get your team involved – try an online meeting to bounce ideas around.

Next time: in the final part of our Homework for Retailers series, we’re at the final PLANNING stage before we reopen the shop.

 

We're open for business and helping retailers manage their business while the shops are shut. Get in touch with us via the SUPPORT button on our website or email support@crossovertec.co.uk.  A Shopify account is a great way to show customers what you are selling and takes just minutes to set up. Get in touch with us today and we'll link your new account to your XPOS system.