I believe most retailers realize (sometimes grudgingly) that technology is a must in today’s marketplace. A sizeable portion of these retailers likely now have a website and an online listing for their stores. They may even own a smartphone and know how to play a game or two on it. >But too many retailers are still in the dark about the significant, game-changing impact that the right technology can bring to their business, their bottom line, and their peace of mind.
As the owner of QFloors, a flooring software business, I’ve been the fortunate eyewitness to many success stories. While technology can help in many areas, let’s focus on business management software.
Business owners are often worried about the cost of industry-specific software. Especially when they can limp along using generic accounting software from the local office supply store. But it’s important to look at not only the purchase price but also the return on that investment. What is going to make them more money in the end?
When technology does its job, it should impact your success as a company. Technology should increase profits and productivity. It should lower overhead, boost operational efficiencies, and allow you to sell more. It should give you quick access to an accurate view of exactly what is happening in your business, and the insight to respond appropriately.
The right technology can even make a difference in your survival. Case in point – November 2007 through December 2012 were tough years for the industry. I’ve seen several reports estimating that between 20-25% of retailers in the industry went out of business. My company also tracked what was happening, and during that same period of time, only 3% of our customers who reported they were using QFloors software on a daily basis went out of business; 97% weathered the Recession. The difference between 3% and 25% is too remarkable to ignore. And when I talk with our customers, they confirm that using the software had a major role in keeping them afloat.
But it’s more than simply surviving lean times. Technology should help you grow a successful, profitable business. If it’s not, you’re either not taking advantage of all it has to offer, or you’re not making the right purchases.
Last fall QFloors’ CFO Trent Ogden conducted a study. He compared QFloors customers’ EBIDTA numbers (basically their profitability) against published industry averages. The results happily surprised even us. The QFloors customers were twice as profitable as the industry averages for other similar-sized flooring businesses. The QFloors users had an average EBIDTDA of 5.63%, compared with the industry average of 3.03%. When you apply this 2.6% difference to a $1M company, it comes to $26,000 more per year. A $5M company would recognize $130,000 more per year as a QFloors user.
So how can something as simple as software make such a difference?
It isn’t just one thing, but a combination of many things that generate extra profit. Benefits like:
- better organization and streamlined operations
- eliminating mistakes
- preventing overpayment to employees, installers, vendors, and the government (taxes)
- more accurate reporting and tracking
- ability to do more volume without adding overhead
- instant real time profitability information
- time savings which allow you to be more focused on what is important
These benefits, and others, all combine to deliver savings. Technology should result in sizeable efficiencies in the heart of your business. It adds up, and in the end, you need all of these advantages to be competitive.
Make sure your technology is paying you back. If it isn’t delivering on that investment, something’s wrong. Make it show you the money.