Should I Computerize My Retail Store or Restaurant? How Much Should I Spend?
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10 Essential Things You Should Know About Your Computer
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Should I Computerize My Retail Store Or Restaurant? How Much Should I Spend?

Yes!!!

Every retail store or restaurant should be computerized. We used to have guidelines. For example, we used to recommend that any retail store with $250,000 or more in business should computerize. Things have changed.

Computers are now less expensive. Five years ago, it would cost about $2,000 for a suitable computer. Today, you can purchase an adequate computer with monitor for less than $600. And, your $600 computer will probably be 12 times faster than that $2,000 computer purchased five years ago.

We now recommend that every retail business or restaurant install a computerized system. It will always be cost effective.

Well, you may look at this as being self-serving. After all, pcAmerica is in the business of writing computer software for retail stores and restaurants and selling computers, barcode scanners and other equipment for retail stores.

Let’s look at the economics of purchasing a computerized system. All the figures below are just numbers in general. These numbers are just quick estimates to help us look at computerization strategies.

How much does it cost?

Computer $600

Cash Drawer $200

Receipt Printer $300

Barcode Scanner $300

Touch Screen $500

Customer Pole Display $300

Software $432 (based on per unit for a 3 user system)

Installation $500 (based on per unit for a 3 user system)

Tech Support Contract $150 (based on per unit for a 3 user system)

The total cost of computerizing is approximately $3,282 per station.

The total cost of computerizing in the above example is $3.00 per day. The estimated increase in profits due to computerization comes to $17.12 per day (see calculation below).

The experts say that you should be spending about 2% of your gross income on computerization and automation. So, if you are a small business, doing about $100,000 per year, you should be spending about $2,000 per year on computerization.

As a guideline, a computer system should last 3 years (or perhaps as long as 5 years). A business doing $100,000 per year should spend about $6,000 on computerization.

A retail operation doing $500,000 per year should be spending about $10,000 per year on computerization (or about $30,000 over a three year period of time).

We know, from experience, that many retailers and restaurants just don’t see the payback. Well, I suppose that business owners just don’t like spending money. Perhaps I should rephrase that. Most business owners just don’t like spending money unless they see the payback.

So, let’s look at a small business with just $100,000 per year in income. The experts say that this small business should spend $2,000 per year on computerization (or $6,000 on a system that can be used for three years). That comes out to $5.48 per day.

“The experts” say that computerizing can increase your profits by 25%. Let’s say the above business makes a profit of $25,000 per year. By computerizing, the above business would increase profits by $6,250 per year or $17.12 per day.

Our small business above will be investing $3.00 per day to make $17.12 per day in profit (or make a net profit of $14.12 per day).

Multiply that $14.12 per day and we find that our small business doing just $100,000 per year can make an extra profit of $5,153.80 per year by computerizing. That’s pretty significant.

The question you must ask is, “Is this profit for real?”

I say that the above numbers are really pretty conservative. They assume that you are not using many of the additional advantages found in your system. For example, if you actually obtain the names and addresses of your customers, you have a goldmine. It is just an absolute goldmine.

Let’s take a pretty extreme example, just to prove the point. Let’s say you own a convenience store. Unlike a clothing store or a furniture store, convenience stores are very unlikely to ask a customer for a name, address, or email address. After all, convenience stores are for convenience. People come in to buy a newspaper. WRONG and wrong attitude. If you do obtain your customer’s name, address, and email address, you have the ability to email your customers weekly (just like pcAmerica) and get customers back into the store. Come in next Wednesday, buy a cup of coffee and a donut and get a free newspaper. Make it fun. Keep those customers coming back into your store. The more you see them, the more they will come back.

Remember...YOUR BEST CUSTOMERS ARE YOUR EXISTING CUSTOMERS. Keep them coming back.

So, the above is just one example of how a business can increase its profits and return on a point-of-sale investment.

The Bottom Line

How much should you pay to computerize? Just multiply your gross sales by 2% and multiply that total by 3 years (since computerizing is normally a three year investment).

If you do $600,000 in sales, 2% of $600,000 is $12,000. Multiply that by 3 and you should be spending about $36,000 on computerization. It will cost you about $3,500 per station to computerize which will give you 3 terminals plus a back office station.

One more rule...DON’T BE CHEAP. I’ve been doing this for more than 30 years and just so many people would prefer to buy the $250 printer instead of the $400 printer. You need to look at this as an investment. A $250 printer is normally a dot matrix printer. Slow, slow, slow. A $400 printer is normally a thermal receipt printer. It prints a receipt faster than you can say THANK YOU.

pcAmerica has been in the business more than 30 years. We know every thing!!! We know that a business must make a profit. We just don’t sell a cash register system. We sell a system full of enhancements that will make your company grow. Keep reading our newsletter...call your account manager below...and we will keep helping your business to grow.

Reader Comments Related to Computer Backup

“You guys are always going on about backing up your database and as a computer consultant for many years I couldn't agree more. Here's what I do. First I have Norton Ghost 9.0 (formerly Drive Image by Power Quest) backup my RPE database partition on the server to a second drive (that is mounted in a removable tray so it may be taken off site) every hour, on the hour. I have Norton Ghost also backup the C: drive of each terminal to that removable drive on the server early each morning. Then I wrote a simple batch file that I have set up to run in Scheduled Tasks at quarter after every hour that simply copies the database from the server to the main terminal drive. This way if the server crashes ornetwork dies I can simply change the database location to the main terminal and keep going until the server can be brought back on line. Next I'm working on setting up a batch to automatically email the database to my offsite office every night. When I get the time I plan to set up a VPN tunnel to my office so I will be able to simply copy the database to my office computer every hour.”...Wayne M., San Francisco

Editor’s Comments:

Wayne, you have it right and should be commended. Using Norton Ghost is an excellent idea. You can tell from reading our newsletter, that I am a real “backup freak.” I keep bringing it up within our newsletter. There’s a reason for it.

Less than 50% of all pcAmerica customers perform a daily backup.

Only 20% of all pcAmerica customers who lost their data have a recent backup (within 24 hours).

It’s not that our customers are bad (related to backups), this is typical.

According to Harris Research, a survey of 2,299 U.S. computer users, found that 35% of all computer users never make a backup. 76% don’t backup periodically.

44% don’t backup because they don’t understand how to do it. 20% don’t backup because it takes too much time. 14% don’t want to pay for a backup device or service.

“Computer users who don’t have a systematic backup process are, in essence, walking a digital tightrope without a net,” said Stacey Lund, vice president of marketing for Maxtor. “Regrettably many people come to us after they’ve already lost their data because of an unfortunate instance like theft, a fire, a system crash, virus or an aggressive case of spyware.”

It’s obvious from your comments that you take your backups seriously. Too many of our customers don’t take it seriously until their data is lost. So...thanks for your comments. We will keep talking about it until we get 100% of our customers in the fold.

Coming Again Next Week

10 Essential Things You Should Know About Your Computer

Yep. I know it was promised for this week but we are running a little long this week. I will give you a hint though. #1 is related to backups.

It’s nice to know that people read our newsletter (especially since it’s free). Our 10 Essential Things You Should Know About Your Computer appears to be one of your favorites. I’m going to start the column again beginning next week. Things have changed within the computer world in the last 3 months (just like the retail business world). So, the column will also change and be updated.

You will see and read about the 10 most important things that I believe all computer owners need to know. I have a new #1.