Don’t just sit there – give yourself a financial health check-up!

Challenging visitor numbers can have a direct impact on income, but what can you do? Now is the time to be more proactive than ever, as AIM Associate Supplier Paul Ogburn explains.

There are four key areas you can look at that have a direct impact on the financial success of your business: offer, gross profit, operational costs, and stock holding.

Offer

Does your offer still align with your current audience? It will have altered over the past months, particularly if you are reliant on the international visitor, and staycations are also at an all-time, so ask yourself:

• Is my offer right for the current visitor type and demographic?
• Do my retail spaces need to be reviewed and product locations altered to ensure my ‘hot spot’ offers align with my current audience?
• Is my menu still appropriate for my current audience type and demographic?
• Is the price architecture of my offer aligned with my current audience or does it require some adjustment?
• Is there some compelling narrative missing within the offer that would increase customer engagement and spend?

Gross Profit

With the number of transactions significantly down on budget, it is crucial you are maximising the gross profit from every pound spent. This can be achieved in several ways:

• Review the price architecture, is there an opportunity to increase the selling prices on your most popular lines.
• Renegotiate cost prices, minimum order quantities and terms and conditions with the suppliers, reducing financial risk and helping with cash flow.
• Review the materials used within products for more reasonable alternatives.

Operational Costs

With income challenged by lower visitor numbers, the operational spend must be reviewed to balance the budget and improve the ‘cost to sales’. This requires some difficult decisions, particularly around resource, which is usually the greatest operational spend of any commercial business.

Key questions:

• Do my commercial functions need to operate throughout the full opening hours of the venue?
• Is there an opportunity to review structure to improve efficiency and effectiveness?
• How can we operate more efficiently to meet current demand (e.g changes in hours/headcount?)
• A full review of additional operational spend, their viability, operational requirement and effectiveness, is there an opportunity to reduce or remove altogether, the marketing spend for example.

Stockholding

Applying the 3 R’s to your stockholding is a must to reduce your capital spend, future financial commitment and improve cashflow, they are Review, Rationalise and Return. This will reduce the level of buying and financial commitment, improve cash flow and achieve that much needed injection of cash back into the business.

• Review levels of stockholding across entire offer, set new minimums to reduce levels of buying and stock holding.
• Rationalise the retail offer in line with current audience types and demographics, removing products that are deemed unsuitable, whilst enhancing those aligned for greater impact.
• Review all Sale or Return stock and return all poor sellers.
• Review book offer: rationalise, return poor sellers and increase number of face outs.

Paul Ogburn Consultancy Limited specialises in supporting the cultural, heritage and attractions sectors. Contact Paul on paul@paulogburnconsultancyltd.co.uk or click here to visit the website>>

AIM members can enjoy a 20% discount on Paul’s popular Retail Surgeries – a cost-effective way of tackling a commercial issue without incurring the cost of hiring a consultant for the day. Click here to book yours>>