Value Drivers for Retail Trade
The retail trade industry comprises many different sectors. Retail trade was severely affected by the Covid-19 pandemic as many stores were forced to close their doors. This caused a shift of moving to online shopping. This not only caused growing pains for businesses but forced some to permanently close down. In 2020 alone, retail trade experienced a decrease of 10.75% in revenue. However, as the pandemic has quieted, retail trade has rebounded since the decline of 2020. Many shoppers have moved online which has shifted the style of shopping. If you are a retailer, these and many other value drivers for retail trade impact the value of your business.
Whether you want to expand, acquire, or grow, knowing what drives your retail trade is important. This article will give you several examples of key value drivers for retail trade. If carefully considered, value drivers will increase the value of your retail trade business. Peak Business Valuation, business appraiser, will consider key value drivers when determining the fair market value for retail trade businesses. For more information, schedule a free consultation below.
Key Value Drivers for Retail Trade
In the following paragraphs, we discuss key value drivers for retail trade. To better understand the value of a retail trade business, obtain a business valuation. Peak Business Valuation, business appraiser, is happy to provide you with a business valuation and answer any questions you may have. Schedule a free consultation!
For more information see Valuing a Retail Trade Business, How to Value a Retail Trade Business, and Valuation Multiples for a Retail Trade Business.
Online Presence
While businesses have since opened their doors again following the pandemic, retail trade is not the same as it once was. Consumers have adapted to the comforts of online shopping. Whether it’s clothes or groceries, online is the preferred method. Because of this, it is important for a retail trade business to create a strong online presence. For ideas on how to do this, see The Value of SEO.
E-commerce Revenue Streams
E-commerce provides another source of revenue for retailers. When receiving a business valuation, a business appraiser at Peak Business Valuation will consider your various revenue streams. Diversifying revenue streams reduces risk while creating recurring revenue streams maximizes value. E-commerce is a great way to produce more revenue.
Trained Employees
Next, having a trained staff will benefit the value of your retail trade. Retail trade has a high employee turnover rate. This means structured training needs to be in place no matter who is working. A trained staff will drive volume and increase sales. They will have the ability to close sales and provide great customer service. Creating structure for your retail trade might take time initially but will save you time and money in the future. Structured training will relieve the business owner of added stress and increase the value of your business.
Product Mix
Retail trade might just be one of the hardest industries to stay ahead of. This is because fashion trends are constantly changing. A retail trade must remain ahead of the trends and offer a diverse product mix. Having a diverse product mix brings in different customer types which ultimately drives volume. A great way to produce a diverse product mix is with a strong marketing team. Decide whether to target a specific market or expand to new markets and leave the rest to the marketing team.
When valuing a retail trade business, a business appraiser at Peak Business Valuation will look at your product mix, operating, and profit margins. They will compare your operations to those of similar retail trades.
Stock on Hand
As the supply chain fights to recover from the pandemic, retail trade still suffers. Inventory continues to be low. As such, retail trade is still quite risky. As a business owner, it is important to stay ahead of inventory shortages. While you cannot control the supply chain, you can be vigilant. A great way to do so is to order inventory earlier than you normally would. Be aware of your stock numbers and do your best to get product early. If that is not possible, remain open with your customers. People appreciate open communication and will be understanding of the situation.
A business appraiser at Peak Business Valuation will consider historical averages when valuing a retail trade. This is often a better indicator of a “normal year”. With the pandemic upsetting the retail trade industry, historical averages will be even more important.
Summary
In conclusion, there are many factors to consider when valuing a retail trade business. Focusing on these value drivers will improve the fair market value of your business. It is important to understand the key value drivers behind your business. This will help you set realistic goals for your retail trade business. A great way to do this is to obtain a business valuation.
Our business appraisers at Peak Business Valuation are happy to help. We provide business appraisals for retail trades businesses across the nation. A business appraisal will identify a fair market value and specific value drivers for your retail trade business. For more information, schedule a free consultation below. We look forward to working with you.
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