Busy is a 4 letter word
Check out this article by Dennis McCaron:
Some days, it may seem like you were busier than all get-out, but you didn’t make any money. Other days seemed slow, but you were stunned at how much cash you generated. Sometimes the retail world doesn’t make any sense, does it?
Being “busy” isn’t a good indicator of how much money, cash or profit a business makes. “Busy” is actually a four-letter word.
I think everyone knows that simply increasing sales is the most difficult way to increase profit. You must increase car count and take on more customers. You must spend money on advertising and maybe increase store hours, too.
If your store is doing $1.2 million in sales, making $60,000 a year in profit, and you increase to $1.3 million in sales, you get, wait for it, $65,000 in net profits. Woo. Hoo.
This is a ton of work for an extra $5,000. And that’s before taxes.
What you need to do is change the things that you sell — and preferably to customers who are already coming in the door.
For the rest of your business-owning life, please remember this phrase: “The least profitable thing you sell is what customers walk in the door to buy. The most profitable thing you sell is what you recommend in connection to that item.”
When I ask tire dealers, “What is the least profitable thing you sell?” The usual answers are tires (Calling BS on this point. Never met a poor tire dealer. JS) and oil changes, which is often true, but that scope is too narrow. Other than flat repairs, you must heavily advertise (high expense) and be ferociously competitive (low margin) on most of the services that customers request.
To read what Dennis says will fix this, click HERE.
