Myself and my colleague John Bradberry Charlotte NC resident and small business guru, have been spending a lot of time recently with some businesses in a shopping center in Charlotte. We have been working with many small businesses in an effort to help them boost sales and more importantly, reduce shrinkage. What surprised me the most about the business owners was how few of them knew what shrinkage was and how they could prevent themselves from being exposed to it.
If you are a small business, it is important to understand what shrinkage is, and what you can do to tackle this loss of money from your business so that you can boost your bottom line, let’s take a look.
What is it?
Business shrinkage is basically unknown loss to the business, there are many factors behind this type of loss but usually it can be broken down into 3 main attributes which are theft, damage and human error when counting or booking in stock. Shrink can play a huge role in the finance of your business and it could be doing a great deal of damage to your profits if you do not tackle it.
Dealing With The Causes
Let’s take a look at what you can do about the biggest causes of shrink.
– Damages
When it comes to items being damaged in the business, it is vital that your store has a policy that all of the staff are aware of. The key is to try and salvage the products as much as you can, very often you will find that products can be fixed and sold off at a reduced price thus minimising the loss. Make sure that there is a location where waste must go and then at the end of each day, a member of staff should try to salvage the waste items, and reduce their price.
– Theft
Theft is likely to cause you the most amount of high value loss so you should ensure that you are protecting high value items, using security devices like cameras and alarms and being smart when it comes to product protection. One of the best ways to overcome theft is by offering great service and you should have your staff trained to not only be vigilant with customers, but also to offer each customer that comes through the door a big smile and the offer of help. This is something that thieves most definitely do not want.
– Human Error
You should be ensuring that all staff are properly trained in checking in deliveries and for your part you should be spot checking them. Assuming that deliveries are accurate, the only way in which you can lose stock is through bad counting, theft or waste. Follow the sam course of action with your stock counts and make sure that high value items are counted weekly so that you can see what is going missing and when.
Being aware of the shrink that takes place in your store is vitally important and you should give the same attention to the losses in your business, as you do to the gains.
