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The holiday craze is behind most retailers, and hopefully, in the midst of the chaos, you managed to not only survive but boost sales. That’s why Q1 is the perfect time to recharge and gear up for a successful and profitable year ahead.
The beginning of the year is typically slower for retailers, which makes it an ideal time to take stock (both literally and metaphorically), assess what went well and what could have gone better, and consider new technology needs.
Depending on the nature of your business, these slower months are also a good opportunity to gather the required tax documents and get ahead of questions that your accountant may have about the inventory in stock, its value, and COGS for upcoming tax filings so you’re not scrambling when business inevitably picks back up.
That’s a lot to think about. So here’s a list of the top areas to address at the beginning of the calendar year.
Taking stock of your inventory levels.
Inventory is the lifeblood of any retail business. Which is exactly why it’s the first place to start when reviewing the year. Was your inventory forecast accurate enough to meet customer demand without tons of overstock? Conversely, were you understocked? Did your holiday promotional strategy achieve the desired sell-through without eating into your profitability? Were you appropriately staffed to service customers and fulfill orders on time? These are all helpful questions to ask yourself and employees in order to understand what could be done even better this year.
After the Black Friday and Cyber Monday rush, retailers typically have less stock to count, which makes it a good time to perform inventory counts. Using technology solutions like Square for Retail, it’s especially easy to perform cycle counts and full inventory counts directly from an iPhone or iPad using only the built-in camera. To further expedite the process, multiple employees can perform product counts at the same time without worrying about the data not syncing across all locations.
We chose Square for Retail as we wanted an automated system that would connect our physical and online stores and save us time in manually adjusting stock. ”Alexandra Marcher → manager, The Leamington Wine Company, United Kingdom
Understanding your inventory on hand is the first step to determining what products and respective quantities you’ll need to reorder from your existing vendors or purchase at market in the coming months.
Using performance insights to forecast demand.
Understanding your data can do wonders for your business. Which is why it’s smart to review last year’s performance reports to further inform your purchasing and promotional plans. Having the reports on hand with the most important retail KPIs will help give you confidence in your plan moving forward. Performance insights will shed light on your business’ seasonality, which product categories and SKUs had low or high sell-through, and where your profit margins may be thinner than you’d like, signaling the need for pricing adjustments. Using Square for Retail Plus, you have access to five critical reports that will help inform your sales and operating plan going into the new year: COGS, projected profit, vendor sales, inventory by category, and inventory sell-through.
The automated inventory sell-through report is a tool that we use to really look at the future of our business. We want to look at the sales velocity, and we want to know what’s doing well. So that really helps us just discuss our numbers, look at what we need to change, and just keep pushing forward to the future. ”Alexis Lilly → Co-owner, Nappily Naturals
Plus, getting an accurate read on your inventory will tell you what’s left on hand, making tax season less of a headache and informing you of what products you’ll need to order more of from your vendors.
Taking care of the administrative tasks you’ve been putting off.
Whether it’s closing out purchase orders you were too busy to take care of during the holidays or applying for loans, now is the time.
Closing out purchase orders received and tracking what you’re consistently reordering or having a difficult time refilling can help with projected sales and improving vendor relationships. Managing the purchase order process through the same system where you process sales enables you to keep on top of all of your inventory with centralized documentation of all orders and related invoices for all of your POs.
We used to handwrite every order in our account book, so there were constant errors and inventory issues before we switched to Square. Now that we have a team and a reliable POS system, we are planning to expand our stores not only in Sydney but across Australia. Our first Melbourne store was very successful, so that is our starting point to expand further across Australia.” ”Youngmin Jo → director, Tom's Project
Once you have confidence in your sales and operating plan for the year ahead, review the resources required to make those plans a reality. Even if you’re an established retailer, small business loans for inventory purchases, purchasing equipment, or hiring employees can help free up funds quickly. Square offers loans* ranging from $300–$250,000 which are typically approved within 1–3 business days.
Finally, the new year is an ideal time to evaluate a new POS system if you’ve already been considering it. Switching your POS system may seem like a daunting task due to the time you’ve invested in your current solution, and you’re not wrong, but you’ll be glad you switched while you actually have the downtime to transfer your data, train employees, and account for all orders. If your current POS system is slowing down your staff, it may be time for a more user-friendly and integrated solution, and you wouldn’t be alone. In the Square 2023 Future of Retail Report, 41% of retailers surveyed reported planning on automating operations to increase staff efficiency. Whatever POS solution you opt for, it should seamlessly connect to all your sales channels, automate manual tasks, and accept all the payment options customers are asking for.
While most people do not love the administrative tasks required to run a successful business, they’re a necessary evil. You’ll thank yourself later for not waiting until business picks up again to take care of these important housekeeping tasks.
Please note that quotes from Alexis Lilly have been sourced from interviews for which they received compensation.