5 key characteristics of a successful retail business

How does your retail business compare?

Times continue to get tougher and tougher for the retail industry. It was already suffering before the COVID crisis and lockdown but in many cases this has proved to be the final straw that broke the Camel’s back for many in the retail business.

But tough as times are, there are many positive stories out there. At THP we’ve helped retail clients open thriving new branches, launch new product lines on the High Street and online and diversify into new retail markets. Indeed, we’ve cheered them on as they’ve moved from success to success.

Of course, there’s no magic formula to success, but in my experience the more that smaller retail and business owners think and act like big businesses, the more likely they are to succeed.

That’s why I’m sharing five key characteristics that I believe make a retail business succeed.

1. HAVING A CLEAR STRATEGY FOR YOUR RETAIL BUSINESS

If you plan and write down where you want your business to be in 1, 3 and 5 years’ time, you are much more likely to succeed than if you simply keep your goals in mind — so share your plans with business partners, fellow directors and your accountant.

2. CREATING A FLEXIBLE BUDGET

If you want to succeed, it’s crucial to have a budget that allows you to react to changing circumstances.

3. MEASURING YOUR PERFORMANCE

Always compare your monthly figures with the previous month’s, with your  budget and with the same period the previous year.Drill down into the figures to find out what’s profitable and what’s creating a drain on your budget. Look at ways of protecting good margins and increasing poor ones. Setup some KPIs (Key Performance Indicators) and monitor those regularly to measure your performance.

4. FORMALISE THE PROCESS

Insist that your fellow directors or business partners spend scheduled time reviewing your management accounts every month. There’s always a temptation to put this vital task off and get on with the day-to-day work of the business — but if you take your eye off the figures, they’ve a nasty habit of slipping out of control.

5. UNDERSTANDING THE ACCOUNTS OF YOUR RETAIL BUSINESS

It may seem obvious, but business owners who really understand what their accounts mean have a much stronger grip on their organisations.

If you need help understanding Profit and Loss accounts, Balance Sheets, Fixed Assets, Accruals and Prepayments, then talk to us at one of our offices in Chelmsford, Sutton, Wanstead and Saffron Walden — we’ll walk you through the process of understanding what the figures in your management accounts mean for your business.

By implementing strict and focused financial reporting systems and procedures, retailers can make informed and timely decisions based on numbers they trust and understand. In these tough times it can make all the difference between success and failure.