The retail industry is one of the segments of the economy which provides a way for millions to earn their living. This industry happens to be one of the fastest-growing economies with products and services ranging from food, apparel, appliances, home furnishings, auto parts, home improvement and more. With the wide range of products it covers, it is no wonder that so many businesses are involved in retail operations.
After much discussion on the benefits of launching a retail store, you have finally decided that you are ready to take the plunge and join the industry. You have done your homework and see a niche for your business and everything appears to be falling into place. After this important decision, you now move on to the steps in setting up the business and as you go through this exercise, one of the important things you will have to consider is cash management. Simply put, are you going to go with the advanced point of sale (POS) system or stick to the traditional, electronic cash register?
Advantages and disadvantages of cash registers
The majority of start-ups will gravitate towards electronic cash registers as they are definitely more affordable. One may opt to purchase the lower model first as it is definitely more cost-effective than other models. As your retail store progresses, you may start upgrading to higher models that allow for advanced functionalities and features such as complex recording and data storage.
Electronic cash registers, even the simplest models, can record sales, look up prices, calculate change and print receipts for customers. Some models can come with software that allows for charging the correct sales tax, allocate correct sales to an employee, and run reports. The reports you need as your retail business grows may become more sophisticated and complex as you start learning more and more about the business. The cash registers are generally secure as the cash drawer automatically locks with only authorised users allowed to log in with a password.
While cash registers are relatively easy to use, they do require training so users can operate the system smoothly. Different models have different sets of procedures even if you may have used one previously. The instruction manuals have different steps to follow for the model you purchased. Entries on the machine may be different and users must be aware of this. This is a minor drawback and can be fixed with training. The trouble is when the machines start malfunctioning; data stored in it can be lost. Temporarily, malfunctions can happen with power outages and you can lose productivity during that time.
Advantages and disadvantages of point of sale systems
Obviously, the main disadvantage of using a point of sale system is its cost in comparison to electronic cash registers. Depending on your projected sales, purchasing one early into the business set up can eliminate the need for constant upgrades. Besides, vendors like Shopify can provide systems that can be customised according to the retail store’s needs. The cost of the point of sale systems will generally include the POS terminal, bar code scanner, cash drawer, card reader, and receipt printer.
As the point of sale system is definitely more sophisticated and advanced than an electronic cash register, you can expect a more detailed, granular report that allows you to deep dive into numbers that are hitting or exceeding your goals. You can also look at bottlenecks in the business since your reports will allow you so dig into reasons for what is causing you to lose money.
Better tracking of inventory allows you to quickly point to which product or even product models are selling like hotcakes and which ones stay on the shelf longer. As data is stored on computers or locations where you can easily retrieve information even if your hardware should bog down, you can keep coming back to these numbers when you need them and check on how your business is growing over time.
The point of sale system is automated with sophisticated bar codes scanners that can also store data for you depending on the model you have purchased. The software for the system can be upgraded over time to allow you to get more types of reports to look at when deciding on which items to purchase and add to your inventory. These reports will also help you decide which items you can remove from your inventory.
Retail store owners can ask for professional advice from experts and vendors on how best to go about this. At the end of the day, the decision will be solely yours so you need to do your own research too and know exactly what you want and how much you are willing to shell out for it.