Lessons for Financial Success
As a Merchant, you are a store owner, a wholesale buyer or creative artist, and maybe even a craftsperson. But there is a good chance you are not an accountant. We all know that the financial side of managing a shop can be challenging, however you don’t have to be a finance expert to manage your stores finances.
Here are some financial tips you should know about managing your store’s finances:
Work Your Profit Margins
Pricing and profit margins are essential for any successful store. Pricing appropriately is definitely the number one factor that helps with sales of any product. This is considered the perfect price point, where the price is reasonable but not so high that people don’t look at it as the perfect gift anymore.
Budget for Success
Many sellers count on their stores to become their main or sole source of income, therefore as a seller, you have to make sure you are budgeting for all financial obligations and paying yourself fairly. Here is a breakdown of an order in which you should set aside money from your income:
- Operating expenses like supplies, shipping, packaging and any other operating cost.
- Reinvesting in your business like upgrading your equipment, advertising, holding events, creating business cards or flyers, etc.
- Deductible expenses like health insurance, transportation or pre-tax retirement savings, if any.
- Quarterly estimated taxes.
- Pay yourself.
Reinvest in Your Business
Saving a bit of money from each sale makes growth possible. Reinvesting is the most important thing you can do with your money, as it will allow for your company’s growth. With every sale, you should set aside a fraction of the profit to be used in purchasing more stock. This ensures an increase in your inventory in both quantity and value. If you are confident and in the position to do it, you may take a chance on something outside of your specialty area. You could try stocking products that can appeal to a wider audience as this could lead to a growth in your customer base. Most often, chances like these often pay off.
However you choose to do it, your goal is to retain your current customers and also attract newer buyers in the process.