Tell Your Staff Where Sales Dollars Go

In Making Money Is Not Illegal, Immoral, or Fattening, Art Freedman asks, "For every dollar that goes through the front registers, how much of that dollar is profit you could reinvest in your company? If you don't know, guess. I'm talking annual average."
Then Art has another question: "If you asked your hourly employees to write down that number, what would they write? In my experience, they'll write down some number between 30% and 50%. They really think that for every $100 that goes through the registers, you are keeping $30 to $50 in profit. I'm not criticizing them. I'm just saying that, based on my experience, many of your hourly employees, as well as some managers, simply don't understand your business."
To get your staff on board in boosting profitability, they should know how thin retailers' profit percentages really are. Then they can see how even small mistakes, if repeated, might drive you out of business, losing the jobs for them and their coworkers.
"The reason that the employees come up with the 30% to 50% in profit is that they forget about the largest investment of all. It's inventory replenishment. I tell them, 'We sold it. We've got to buy more.' About 50¢ of every dollar I take in at the register goes to restocking inventory."
Tell your staff where sales dollars go. It will build their trust and motivate their job performance.
To educate your staff in this way, start by asking yourself another question or two: Did you need to make a guess when asked how much of every dollar that goes through the front registers is profit you could reinvest in your company? If it was no more than a guess, what will you be doing today to find out the real answer?