BusinessHABHow to Make POS Business more Profitable: Point of Sales system business – POS is one of the profitable business with absolutely a low start-up cost.
Since bill payment, fund transfer, and withdrawal had become part of almost everyone’s life.
You have a yes as an answer to the demand rate of this service.
There are key areas that can help drive profitability.
These are reducing costs, increasing turnover, increasing productivity, and increasing efficiency.
You can also expand into new market sectors, or develop new products or services.
This guide explains how to assess your business‘ profitability, deliver growth for your bottom line.
And how to plan and manage change.
So what are those practicable ways to bring your business into its stand?
Here are a full easy Ways on How to Make POS Business more Profitable.
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How to Make POS Business more Profitable:
1. Eliminate tasks and activities that don’t add value to the company or customer.
Every money you save by eliminating the cost of things that don‘t add value to your company or to your customer drops directly to your bottom line.
2. Increase pricing.
If you bill hourly, review your billing rates and push them higher.
If you charge per product, look for ways you can command a higher price.
Could you bungle more value into a package?
Improve your marketing and sales scripting to effectively sell at a higher price?
Or could you just boldly increase your pricing?
How to Make POS Business more Profitable:
Most businesses set their prices when their business was first launched.
And since they were so hungry for business, they set pricing levels low.
Over time, the business likely only made nominal increases to pricing every few years.
But rarely did the owner ever sit down and fundamentally rethink his or her pricing model.
Well take a close look at your pricing now.
How to Make POS Business more Profitable:
3. Regularly review your administrative and operational staff levels closely.
Most service and administrative departments can be cut by 1 in 4 with no impact on quality of work.
Many can handle 1 in 3 cut with no significant negative impact.
I’m not suggesting you cut staff, instead I‘m suggesting that you delay hiring admin and operational team as you grow.
Let your revenues grow faster than your hiring.
4. Shorten your sales cycle.
How can you close your sale faster?
This will decrease your sales cost per transaction and free up a lot of hidden cash flow that previously was locked up in your sales staff.
5.Increase the dollar value of every purchase transaction with your clients.
Ask, “How can I get each customer transaction to be for a larger dollar amount?” What upsells, cross sells, or resale could you strategically implement? What package offers could you test and introduce?
How to Make POS Business more Profitable:
6. Beware the steep cost of attrition.
Customer retention is a strategic expense if spent wisely. How can you increase your customer retention?
7. Feed your winning sales people more leads (even if that means you starve your lower performing sales people of leads.)
Audit the “$ value per company generated lead given to a sales person.“ This is not a time to be “fair”, but to be strategic. If every lead you give to John is worth $2,100 and every lead you give to Sarah is worth $3,200, then you’ve got to take this into account when you divide leads. It costs your company $1,100 extra in lost sales for every lead you give to John instead of Sarah. Be transparent about this and let it be a spark to help John learn how to increase his own dollar value per company lead given to him.
8. Strategically map out systems to help your customer consume your product or service faster so that they get more value and hence repurchase more frequently.
Look for ways to educate them on the ideal use of your product or service.
How to Make POS Business more Profitable:
9. Shift a cost from a fixed to a variable expense to give yourself greater flexibility.
This is a way to protect your cash flow.
It is extremely important for unproven tactics and strategies.
For example, pay per sale versus a guaranteed amount for an outside sales person.
10. Shift a cost from a variable to a fixed where the value is proven.
Make this shift only when you can negotiate a substantial price savings by doing so.
11. Consistently look for ways to lower your fixed overhead.
Scrutinize your base expenses to eliminate non-strategic expenses that just don‘t add value to the company or to the customer.
How to Make POS Business more Profitable:
12. Negotiate hard.
Take the time to plan out your negotiation strategically.
Create competition for your dollars.
Create a list of concessions you want, with extras for you to trade off.
Research the market to better understand the best deal you can expect.
Even hire an experienced negotiator to help you make the purchase on the best price and terms you can.
If the asset you‘re buying for your business is large enough, the ROI on your negotiation work can be immense.
13. Get clear on all the costs of inventory: cost of capital; storage; insurance; etc.
This will help you make informed stocking levels.
How to Make POS Business more Profitable:
14. Set optimal inventory levels and stick to them.
Constantly be on the lookout for ways to safely reduce your inventory levels.
If you have inventory you‘re unlikely to sell, scrap or donate it so that you can free up the space and write off the inventory.
15. Manage your costs
Close management of your costs can drive your profitability.
Most businesses can find some wastage to reduce.
It’s important not to cut costs at the expense of the quality of your products and services.
How to Make POS Business more Profitable:
16. Look at your key cost areas
Your key cost areas to consider are:
- Suppliers – are you getting the best deal from suppliers? Can you negotiate better terms or do you need to change supplier? Can you drive better deals by consolidating your supplier base? Can you buy on a ‘just in time’ basis to make more effective use of your working capital?
- Finance – do you need to review your finance facilities? – are they at the most competitive terms available? Are you using any loans and overdrafts effectively?
- Premises – have you examined whether you are getting the most out of your space? Are there more efficient ways to use your premises? Could you sublet some unused space?
- Production – have you assessed whether you can cut waste and lower the costs of your materials. Check whether you can adapt your production processes so they are more streamlined, using fewer working hours or resources to cut labour costs.
How to Make POS Business more Profitable:
17. Uncover real costs
Using activity-based costing is an effective way to find the real cost of specific business activities.
Activity-based costing shows you how much it costs you to carry out a specific business function.
By attributing proportions of all your costs – such as salaries, premises or raw materials – to specific activities.
The initial analysis may take a little time but using activity-based costing often shows up costs (and therefore potential efficiencies) that you would not normally uncover using more traditional costing methods.
18. Find your best customers
It‘s not just your price list that affects your profitability.
The type of customers you‘re selling to can also make a big difference.
Consider the Pareto principle (often known as the 80/20 rule) and how it could apply to your business.
In simple terms, applying the Pareto principle suggests that around 80 per cent of your profit is gained from 20 per cent of your products or services.
The same percentage of profit is often also gained from the same percentage of customers.
19. Get Registered with CAC (Corporate Affairs Commission)
Also, registering with CAC is not as difficult as a lot of people term it to be.
Major requirements include;
20. Acquire POS Machine
Visit your bank to know the specifics, but popular review suggests you will need to provide the below:
You can also opt to purchase a POS machine from POS Vending Companies in Nigeria. Some of these vendors/operators are:
These vendors sell their POS Machines to you, their prices are usually different, contact them to know more, or visit their websites.
21. Advertise/Offer quality Service
Conclusion
Focusing on your most profitable customers – even if it means letting the less profitable ones go – could boost your profitability, so long as it is handled carefully.
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