How do businesses increase turnover and profits?
Sales Team
Benefits – Many businesses create a sales team to increase turnover, it could be Telesales, Outside Reps. In-store sales staff, there are a number of options, all of which work to increase turnover and profit.
Downside – This has a high cost to run with high wage bills and other employment costs. It also requires management, time spent in recruiting and in HR issues. Very often the person doesn’t work out and more recruitment is required.
Branches
Benefits – When a retail outlet is successful, it is often that the owner wants to open similar branches to expand their audience and increase profits. These can be successful for a number of businesses who want to expand around their area, country or overseas to receive turnover from each individual outlet.
Downside – The cost of opening each branch requires a high spend in the property, fitting out, staffing, and stocking with products. It also requires management time and additional staff to oversee the outlets. This often results in the owners losing money and closing.
Franchising
Benefits – When a business has a successful blueprint for success, it increases its turnover by becoming a franchisor, creating franchises to receive profits from each franchisee. This is a successful model as each franchise is independently run by different owners. The franchisor receives a lump sum for selling the rights to a franchisee and then ongoing profits from the franchisee’s turnover.
Downside – The start-up costs and time restraints. The franchisor has first to set up a business that is successful, which can take years in some cases. The legal work to set up the franchise model is expensive, as is the cost of finding franchisees and the set up costs of each new franchisee, however, this cost is returned in the franchisees fee.
