Increase Profit with 3 Easy Tips
So you’ve launched your collection and it seems to be successful in the first few months. But what do you do when you review your business and find you haven’t hit your initial target profit? Don't freak out yet! Most startup businesses do not hit their financial goals the first time around. The key is not to give up, figure out what worked and focus on the opportunities.
Here are a few strategies we review with our clients that you can use to analyze your business and build steps to increase your profits.
Product Cost Breakdown
This has to be a complete review of every cost associated with making your collection - every element of your garment, shipping material, sample & pre-production cost. Find out where the bulk of your costs are and ask yourself if these elements are important to the overall look, feel and story you are trying to tell. If they are not, find a less expensive alternative. Does your garment really need custom dyed fabric ? Ask your manufacturing partner if there are stock fabric options you can choose from. Do your customers appreciate the custom printed box you are shipping the product in? Maybe try tissue paper and a handwritten note in a generic box. Justifying the cost of each element will help identify the areas you can cut back on to increase your margin dollars.
Research where your competitors are pricing their products. Are you competitively priced? Do you have an opportunity to increase your retail price an extra five dollars? Even an additional dollar to every piece sold can be impactful to your business. Know your business and ensure that your customers can see the value in your products to justify the price adjustment. There are also ways to increase the perceived value of a product with a small investment. Consider an inexpensive drop-in gift you can add to every package you send like hair bands or enamel pins. If sourced correctly these can add value to the experience for your customers at a nominal expense for you. There are also benefits to dropping your prices as well. If the price of your products are slightly lower than your competitors, you have an opportunity to sell more units than before as your customers choose your products over others.
Sales & Inventory Audit
Your inventory is the biggest asset you have. Looking back at your sales history and the relationship between your inventory can give you direction on what to invest in next. Start with identifying your best and worst sellers. Find out if you can capitalize on your best sellers and produce it in a different color way. Avoid attributes in your slow sellers in your next round of ideation. Pay attention to size selling. Invest more in the sizes you sold out of first and pull back on the sizes that are still left in stock. As you work through your next assortment, continue to use your historical information to build the perfect assortment your clients love.
Remember, building a business is a journey. By focusing on product costs, validating your pricing strategy and maintaining a healthy inventory you can plan for long-term profitable success.
Don’t worry, you’ve got this!!!