Running a business requires a careful balance of generating revenue and spending on operations. The difference between these two factors is your profit. Thus, you’ll want to find the most profitable hours of operation.
The best hours will depend on your business and industry. For instance, a movie theater will be profitable at significantly different hours than a bakery.
Consider the following factors when determining your ideal hours of operation.
1. Point of Sale Data
Your point of sale (POS) system houses all the data about each transaction, including timestamps. You can organize information by date and time. That way, you can consider when you see the most customers and sales.
From there, you can rework your hours of operation. If few people come in on Mondays or you don’t see customers before 10 a.m. on Tuesdays, you can cut down on those hours. You’ll then save money while the store is closed.
Be sure to alter your hours on your Google My Business profile so customers can keep up with any changes.
2. Operating Costs
After you use the POS data to find your most profitable hours, you can balance that information with your operating costs. These expenses come from electricity usage, utilities and inventory. Add these up and then see when you spend the most.
You can find creative solutions to cut down on this spending. For instance, you can center your hours around when energy costs less. This may be in the spring when you don’t need to spend money on heating or cooling and you can use natural lighting.
In addition to lower costs, reducing hours can also boost employee productivity. A New Zealand company found that 78% of employees felt better about their work-life balance after clocking in on four days instead of five.
Location plays a big role in your hours of operation. A retailer in an urban area may stay open longer than one in a rural location. Depending on what you sell and where you are, you can structure your hours around your surroundings.
Demographics also factor into location. Older generations live more in rural areas, and as of 2016, they made up 17.5% of that population in comparison to 13.8% in urban areas.
Older people may shop more in the morning than in the afternoon. Younger generations may be out later at night. Knowing your area and demographics will influence your profitable hours.
4. Seasonal Changes
When you consider your hours, you’ll also need to account for seasonal differences. Your business may not look the same in summer as it does in winter, especially with drastic weather changes. Summer brings warmer temperatures and longer daytime light, so you may want to stay open longer.
However, you can also consider that people would rather spend time indoors rather than outside in colder months, which can boost sales. In fact, 71% of brick-and-mortar retailers report the fourth quarter as the most profitable.
You can hone in on the best hours from your POS data and bring in customers during those times.
5. Customer Engagement
You can always count on customers to provide feedback. A simple survey can give you a better feel for when your clientele likes to come in and shop. Based on that information, you can alter your hours.
You can also build an online presence. Customers have been turning to online shopping as the COVID-19 pandemic continues. In fact, e-commerce increased by 44% from 2019 to 2020.
Improve your website for better customer engagement. You won’t have to worry about brick-and-mortar operating costs since people can shop at any time of the day online.
Finding the Most Profitable Hours
The above five steps will help you discover the specific hours that work for your business. With the right changes, you can focus on when customers come in and reduce your overall operating costs.
Credit: Devin Partida is a retail writer and blogger. You can read more posts from Devin at ReHack.com, where she is the Editor-in-Chief.