By Sally Revell, UK Business Manager for Intuit
British retail is going through an evolution. Many are saying that big business has had its day on the High Street, so it is time for small independent retailers to take centre stage.
In 2011, shops that were part of multiple retail chains fell by almost 200, whilst over 2,500 more independent shops were opened than closed down, according to the Local Data Company. This is despite the dip in consumer spending, and signifies an entrepreneurial revolution up and down the high streets of the UK.
But to survive in the long term, strong financial management is vital for independent retailers. With research showing that a third of small businesses don’t make it past their third birthday, here are some tips that could help you to run a more profitable store.
Create a budget
An effective budget can help you to improve the chances of your businesses going where you want it to go financially, and to anticipate potential cash flow problems.
A good idea when creating a budget is to work a contingency cushion into your plan. There will be unexpected expenses that crop up — so don’t budget to spend every last pound.
Run regular reports to gauge how your actual income and expenses compare to what has been budgeted, and make adjustments as necessary. And importantly, stash your extra cash — build up some financial wealth that’s independent from your business assets and don’t splash out too much when the going is good.
Manage your stock effectively
As a retailer, you’re only as good as the stock on your shelves and, effective inventory management is key to running a profitable business. Having a clear outline of stock processes and exactly what stock is needed at each stage is key. It’s a delicate balance - carry too much stock and your cash flow could be affected, too little and you could lose sales and customers.
Analysing purchasing trends at different times of the year will help you to be prepared for quiet periods and times of high demand. Software can help to manage your stock systems, by displaying exactly how much stock you have at any time, setting automatic reorder points and preventing over ordering.
Manage your payroll
In a retail business operating on the high-street, the majority of your employees will be customer facing, and so in many respects are your most vital asset. Therefore it’s crucial to make sure you have systems in place to pay them accurately and on time. As an employer you need to be aware of the key compliance dates and deadlines — if you miss them you will be liable to penalties from HMRC.
HMRC strongly recommends you use an electronic payroll system to simplify the process — it's much easier than getting to grips with a manual system and you're much less likely to make mistakes.
Get professional advice
It is important to get an accountant to support your business, and not to skimp on professional help — it will save you time, money and stress in the long term. But how do you go about finding an accountant that’s right for you?
There are key qualities that are important: whether they have relevant experience of your particular market, if they come recommended, whether they can provide the type of help that you need and the amount that you want to interact with them.
Recessions have traditionally been a time where a great many people set up shop on their own and 2012 looks like it will be no exception. But to thrive on the high street, managing your finances efficiently is a crucial task that could make the difference between sink and swim.
Getting prepared from the very beginning will mean that your bookkeeping can run smoothly in the background - whilst you get on with the things that you really enjoy about running your business.
Intuit, a founding sponsor of StartUp Britain, is backing their StartUp High Street programme launched last week. The makers of QuickBooks accounting software will be offering expert financial advice and free QuickBooks software to the first participating PopUp Britain businesses.
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