The young employee asks “why do we always do it that way? The owner or manager replies “because that’s the way we’ve always done it… If it ain’t broken, don’t fix it!” In other words, owners/managers tend to do that which is familiar and not necessarily what is best for business.
Some practices which are familiar or comfortable tend to be repeated irrespective of other and more productive actions or methods. Alternatively, some retailers continue to perform poorly because they won’t give up their familiar methods, aka, “sacred cows.” The fact is, if you want more profits, it’s time to hold a sacred cow roundup.
What is a sacred cow in business?
A “sacred cow” is any practice, procedure or concept, which is considered untouchable, unchangeable and believed to be vital to the company. The retailer considers such strategies as “untouchable” regardless of the validity or lack of legitimacy of same. These “that’s the way we’ve always done it” practices often tend to keep the retailer from embracing newer, fresher and more productive business practices.
In today’s highly competitive environment from both internet and brick and mortar retailers, one should not necessarily rely on past practices. Certainly, the pandemic of 2020/21 has necessitated the need to reassess the ways and means of conducting business and retaining one’s customer base.
Let’s look at a sample of common “sacred” beliefs which habitually curtail sales and profits:
- “Total expenses simply cannot be reduced any further!”
- “Our inventory turnover rate is 2.5. That’s as high as we can get it.”
- “We simply cannot achieve a gross margin rate of above 33%.”
- ”Markdowns reduce margins and therefore all markdowns are bad!”
- “My key vendors will not give me any lower prices.”
- “The more dating I get, the better cash flow I have.”
- “Some merchandise categories must be stocked even if they don’t sell well.”
- “Sales are sales. They are precisely a function of demand.”
- “We have great customer service.”
- “The best suggestions always come from ownership or management.”
- “Product placement and merchandising have minimal impact on sales.”
- “Online and social media advertising is not important to us. We sell fishing tackle.”
The starting point for making meaningful and positive changes is your willingness to see your business through a new prism. The very act of asking yourself is there a better way . . . how do other retailers approach this issue . . . and should I seek the advice of my accountant, a business advisor or simply ask other retailers how they approach such issues?
Don’t be afraid to engage in some “goofy” discussions for many really great ideas ultimately immerge from such discussions.
Once you select a course of action, make an implementation plan. Remember, it is easier to say I’m going to do this than to actually create a step by step plan for accomplishing the goal.
The world of business is replete with examples of entrepreneurs who had the courage to step outside of their comfort circle and try something new and effective. If you want to really improve your operating results, herd all the sacred cows together and let them out to pasture . . . they’re not needed anymore!