“I have always been on top of my costs,” she says, “but it is eye opening where I have saved money and how I did it.” Ellie Sanderson shares her journey…
Changing the shape of your business in terms of cost base and operation can take some time. It’s not something you can do in three months. This is the main reason why the big high street stores are struggling because for them the scale of change required is huge and can take years; for many that’s been too long. We are small and we are nimble and we can future-proof ourselves now.
A bit of background
My journey of change started 18 months ago when my Brexit nerves first kicked in, when a number of suppliers closed, when WED2BE was getting into full swing and when I was getting an increasing number of calls for coaching from businesses who were in free fall.
Like many, I started to feel concern and I wanted to make sure my business was in the best possible shape to face a downturn in trade. I needed a ‘what if’ plan. I needed to re look at my break-even and come up with a plan to reduce costs ahead of any decline that may happen in sales.
Let’s be honest here and admit that it is a worrying time to be in retail. We would be kidding ourselves if we weren’t nervous and, if you are reading this thinking all is fine, think again.
We are going through the biggest Retail Revolution EVER. People are still spending but they are changing how they spend.
My review covered three areas, property, process, people and product. The infamous four Ps.
I have three shop units, two for retail selling, one for dress fittings, styling and bridesmaid sales.
Property one: I had a break in my fitting suite lease in December 2017. So I grabbed the bull by the horns and started negotiating to reduce my costs with my landlord. I thought, why not – let’s see how far I can push my luck.
I said I would have to leave unless he gave me a 20 percent reduction in rent. He offered me ten percent off, so I left. (The unit was empty for ten months which cost him a lot more than negotiating with me.)
At this point I felt a little sick, it was like playing poker and I knew I had just lost. But I was adamant that the building was not worth the money.
I relocated our Fitting Atelier out of town. I moved into a Regus building. It was a nerve-racking thing to do at the time as it involved taking the operational side of planning and fittings out of both shops. I was also worried about telling our brides the fittings were somewhere else. Getting my head around such a change to the norm in bridal wasn’t easy but I kept reminding myself that the norm isn’t going to protect my future.
I did however, underestimate how much our clients have changed, they didn’t bat an eye lid. A huge chunk of shops don’t offer fittings these days and so it was met with nil resistance. It was seen as positive because of the location on the motorway, parking is easy and free, we have a wonderful reception lounge, the fitting suites are modern, air conditioned and beautiful.
So, whilst at first I thought it was weird, once I had my head round it, it was a brilliant move. Sometimes weird is good.
Relocation property savings £25,000.
Property two: The next property change was Oxford city centre. My love affair with Oxford had slowly died as the rates were increased and the new shopping centre changed the lay of the land. I had a break in my lease in April 2018. I started negotiations in 2017 and once again my landlord was not robust enough with his counter deal so I left. Again I buckled up for the ride as I was only at the early stages negotiating a new location.
Then the new shop we were after fell through. Well, I actually pulled the plug as the landlord was inflexible with what I wanted. I wanted a two-year tenant-only break-clause. He said no, so we didn’t proceed. I totally believe in this current climate with change so rapid that a two-year out is crucial. I moved on to the second shop, which then went into liquidation.
We have now been without an Oxford shop for eight months.
During this time, without a shop, we have still operated and seen our Oxford brides in Beaconsfield but we did miss out. It also gave me a moment to stand back and check if I really needed two stores and the answer was a resounding YES. I knew it as they don’t overlap geographically and have different shopping catchments but what an indulgence to be able to check it.
We opened our temporary shop in Woodstock in January 2019. The new unit will be ready in March and is just along the road so we will be moving again. That final new home will be well worth the wait as the landlords were eager to fill it asap and the contract I finally have is one that works for me first and foremost.
In that eight-month gap, we have hosted many pop up shops to maintain our client base and whilst they were exhausting they were so successful.
Relocation saving £27,000
Property three: I have a brilliant landlord in Beaconsfield and was happy with my rent even though I had a break in September 2018. I did, however, decide to negotiate the return of my rent deposit. I had paid my rent on time for 11 years and felt he no longer needed the security of tying up my much-needed cash.
Refund of rent deposit £13,000
In summary, I saved £52,000 and put £13,000 back into my cash flow. I am not going to lie and say it was easy, I had the negotiations managed professionally and cost me £5,000 but I am more than happy with this result. It’s been a journey of hell but I am delighted I started it when I did.
We need to challenge our landlords to help us survive; we need to be clever with our lease terms and make sure they have lots of break clauses – sometimes doing something that feels weird can pay off.
Brides have changed and we need to change with them. Pop up shops are not the answer for non-established businesses but they worked short term for me. I was also 100 percent happy that they didn’t encroach on any other retailer’s area of exclusivity.
I literally started with a time and motion study of all that we do. I know we have a lot of processes but I am adamant that some of what we do wins us sales and loyal customers. That said, bad habits creep in, extra processes are introduced by the girls and it was time to stand back and take an aerial view.
I started with how many phone calls we answer per day, how many emails per day, customer enquiries and so on. There were a few things that had to change.
The volume of emails for appointments was insane; often taking up to four or five return emails to confirm the booking. And the volume of phone calls to pay for premium appointments was huge. I calculated this was almost 40 hours a week just managing the emails.
We have had an online diary system for years but I now wanted to hand access over to our clients. I started working with a small company to automate our booking system, our payment system and our data system.
We had a huge plan of change that started in January 2019, first with online bookings and automatic payments by Paypal, with clients automatically dropping into our database from the bookings. The next phase is to connect our staff scheduler so that our rota is part of the bookings platform. From there we connect our clients to our social platforms based on preferences.
It is going to be insanely epic, but most of all it will connect us correctly and remove all the process that takes up time. The cost invested in this is not cheap but the savings are four times the cost.
The added benefit is that we will retain all our staff but we will invest their time into the best client experience ever. We have some plans for adding technological gizmos, too.
People have always been the most important part of my business. I am proud that my girls have been with me for years. That does, however, bring challenges as change can be difficult and some may resist.
My approach was very much about removing jobs from them to enable them more time to do the things they love – styling.
Talking about the big picture with your team and listening to what they say is always key. My team is fired up for the second year of change. All the shops in the right places, then all the systems will be doing all the work, leaving us to focus on our brides.
My final note would be that if you are going to do change, do it fast, go in deep and make sure your team are totally on board and understand why things are changing.
This is the one area that eats up any free cash and is the biggest FAIL for so many businesses.
Understanding the supply chain and what makes the wheels go round for our suppliers is crucial; understanding your own business and what makes your wheels go round is more than crucial, it’s critical.
I am proud to say that I have worked with most of my suppliers from the word go. I don’t buy lots of labels to paralyse my clients’ with choice. I buy a handful of well-chosen designers and put my heart and soul into working with them.
• Too many labels can paralyse your clients’ with choice.
• Too many labels will paralyse your cash flow when you need to re invest.
If you consider that a boutique selling 140 dresses per year that has ten labels you’ll see that each designer gets 14 client orders if they are lucky.
My best designer gets in excess of 100 client orders from me per year. Big difference.
The same boutique will need to order 80 – yes, 80 – new samples per year in order to keep its exclusivity. It is IMPOSSIBLE to make a financially viable business with that ratio of sales to stock investment. IT IS MADNESS.
Things will get tougher and those suppliers who rely on sample stock orders to start their season will not be able to negotiate on minimums and I get that.
LESS IS MORE
I have reduced the number of labels I sell for that reason. We are at four with one guest designer per year. I know I can offer my clients a brilliant range of styles across those four labels and within my collection style.
This means my commitment to stock investment has dropped by £10k per shop.
Total saving of £20,000
I have saved around £65,000 nett and reinvested into my cash flow. You will know what feels wrong in your own business. Don’t bury your head in the sand hoping it will all go back to how it was. IT WON’T.
The only way is forward and with buying and a new season already here it’s time to make some changes.
Be bold, if you don’t scare yourself you’re not being bold enough. I had sleepless nights last year with our change plans but I am so glad I started when I did.
We are fit for the future and have our trainers on.
P.S You may know that I run a coaching business for a small number of businesses per year. If any of the above resonates and you’re interested in hearig more, do get in touch – email@example.com