All over the news you hear the cries about the economic difficulties faced by retailers in Africa. Here in Ghana, citizens in certain parts of the country have started experiencing increases in the prices of staple foods like “Gob3” (gari with beans), kenkey prices are soaring, etc. Fuel price is on the rise as well. Meaning, if you are a retailer sourcing items from your supplier, you will end up paying more for transportation and delivery. There’s also been nail-biting situations with imports and exports of new inventory, with multiple stories of items getting stuck at borders for ages.
If your livelihood and that of your family depend on your retail business, then knowing how to navigate your ship in stormy weather is the key to your survival. This is no doomsday article but we know how much you have invested into your business and we want to contribute in helping you get to the place of success and growth. Which is why we have put together some tips on how to stay afloat in these times, and set yourself up to thrive as well.
Because there are a lot of strategies to share with you, this article has been split into parts. Some of the solutions we share will be comprehensive, while others will be short and precise.
Let’s get straight into it
#1 Be extremely sensitive about business expenses
Being able to cut down expenses relies on your ability to focus sharply on what matters the most in your operations and marketing. If you are engaging in multiple marketing campaigns, then it’s time to cut it out and focus on only one or two that really bring in the most returns with the least investment.
Next is to examine the devices, materials and equipment that is used in your retail business. Is there an opportunity to put some of them on hold? Or switch to more utility saving options? In this situation, every cedi saved may be the reason why you survive till the next day.
#2 Be eagled-eyed on inventory management
A lot of retail businesses in Ghana, especially SME retail enterprises, do not organize constant stock taking sessions to ascertain the true value of their products to inform them quickly on what to do with the products so they don’t become an expense. In difficult economic times, retail businesses should focus as much as possible on products which are fast selling, and cut out items which are difficult to sell.
Organizing frequent stock taking sessions helps you to restock quickly on fast selling items which are selling out, and also helps you to identify the products which are not performing so well so you can quickly sell them using promos. Typically called “Reduced to clear” promos.
#3 Conduct customer credit checks and keep good layaway records
A lot of businesses in Ghana like to sell on credit to their loyal customers they believe are capable of paying back items bought. Unfortunately, a lot of retailers find it difficult to keep track of customers who owe them, especially if their staff was involved in the transaction. In an instance where payments are done in installments, a lot of retailers are not able to tell how much is still owed them, and how much has been paid.
Mostly because there is zero proper record keeping practices. Some retailers also, as part of their model, offer certain services in instalments. So you pay a percentage of the initial cost for the items or goods, and then you pay the rest later. Many retailers mostly forget to take their monies back when they have given out so many items on credit. Some businesses thrive off giving items on credit.
It’s not wrong but it’s important to have a system that constantly checks and reminds you of customers who are indebted to you. There are systems designed to send out reminders to your customers on their credit payments to you. You always have to make sure that you are up to date on customers owing you and you take the necessary measures to receive your monies back, so you do not run out of funds to run your business.
Do not wait for when your business is in an abysmal situation and then you begin running around demanding for payments to be made to you. With proper insights, you are able to track all payments due and take the required measures to receive your payments before it’s too late. Our Sumundi Keepsales platform empowers you to keep track of customers who owe you at a glance, and comes with an extra feature to send automated or manual reminders to your debtors.
#4 Lease over buy
The principle for leasing usually applies to equipment, and real estate. One sector of the retail industry that can benefit from this is any retail business that offers delivery services with their own logistics. A couple of retail businesses own bikes and vehicles that deliver their products to customers. Sometimes the difficulty with owning these logistics is the cost of maintenance and other related costs that simply make these vehicles a liability.
So in order to cut down on expenses and rather improve cash flow, you can rent out these equipment to be used by others to deliver their own products. In return you earn some money out of that. Another example of this scenario is that some retail outlets lease out a part of their own space to other retail outlets to rent out as offices or other sections of the store to sell other kinds of items.
It’s called maximising your potential.
#5 Form a Buying Cooperative
This is not an initiative that is popular in our part of the world, but it is a working theory that can be applied to the way retail businesses are run. Imagine you have a supermarket in a community of about a 1000 people. Usually when buying from your supplier, you may be tempted to buy a few at a time in order to restock. Now buying a few products usually costs higher than if you bought your items in a much larger volume. When you buy items in a much larger volume, the prices are usually reduced.
If your supermarket had multiple branches, you would have an advantage of being able to restock all the stores. If this is not the case, then you need to think about how you can enjoy the power in numbers by finding other like-minded retail businesses willing to pool their cash in order to haggle lower prices with suppliers, who usually give big discounts to large firms who buy in bulk.
When you are able to buy in bulk, you receive a lot of cuts in price. So partner with like minded retail businesses in order to have enough capital to buy more products at much much lower prices with very good margins.
There is a lot we shared with you in this article and we believe that if you implement the strategies we have listed here, you will definitely be on the highway to giving your business the power to stay afloat and even be massively profitable in these tough times.