Three of the biggest hidden costs for small retailers

SME retailers have plenty of costs to manage each month, with wages, rent and the cost of stock all taking huge chunks out of your budget on a regular basis. These costs are dutifully entered and monitored through your retail software each month, and it’s a constant battle to keep them in check.

These visible costs aren’t the only factors that restrict your profits. There are many other hidden costs that may not be entered into your accounts software at all, yet they can drain your company’s resources quickly. Are you taking steps to minimise these hidden costs?

#1 Hiring

Every time you have to hire or fire a staff member, your company faces significant costs. The hiring process may take several weeks, during which you’ll be down on staff members and will have to compromise on certain tasks to continue operating smoothly – unless you splash out on costly temporary staff, of course.  Additionally, a newly hired staff member won’t immediately be as productive as the outgoing employee, so you’ll lose potential sales, and key business processes will be disrupted as mistakes occur. Advertising for the post (whether directly or through an agency) will also contribute to the cost of hiring.

#2 Lost employee productivity

A recent survey found that only 55% of workers feel that their working environment allows them to be productive. Therefore, nearly half the workforce believe they aren’t operating as well as they could – this could be down to stress, workload, lack of technology and facilities, or simply that the working environment isn’t suited to their preferred style of work. As a small retailer, you may not have the luxury of being able to cater to all your employees’ whims, but having a brief talk with staff about how they can work more productively is likely to be helpful to both parties. Even minor changes such as reducing clutter in workspaces or tidying up the shop window may have a noticeable positive impact on productivity, and employees will appreciate that you acted on their concerns.

Additionally, your time is a valuable resource – and you should aim to use it productively, too. Small business owners may spend the majority of their time working on administrative tasks or helping out in other areas of the business, but it’s clear that you could be more productive elsewhere. Try to delegate more tasks and use extra time to work on your long term business plan and growing the business.

#3 Late payments

You offer your trade customers reasonable payment terms, but late payments are a problem for almost every company in the construction industry supply chain. Late payments mean that have to be more careful with your cash than you’d like – meaning that you have to hold back on restocking items or growing your business. Time spent chasing late payments is also costly for you and your staff, as you aren’t generating any extra revenue - you’re merely trying to claim the revenue you’re already entitled too. Similarly, late payments might mean that you resort to invoice finance methods that essentially reduce the money you’re entitled to in exchange for receiving the remainder promptly.

Builders’ merchants software isn’t only useful for keeping track of visible costs. It can help protect you from late payments and allows you to use your precious time more efficiently by automating admin tasks. Contact us to learn more about Integrity’s Trader software.