Over the past 6 years my companies have made close to €10 million in sales through retail and online channels. In this post I will go over the systems that we have used to make this happen and talk about how I believe companies at different stages of growth should structure their internal tech systems. 

What is Required and Why?

Retail businesses are complex machines with lots of moving parts which need to be managed accurately to ensure a smooth service to the customer. As a retailer, aside from requiring the classic business functions of finance, HR, CRM we also require specialised inventory management systems and Point of Sale (POS) softwares (and hardwares) to run our businesses. 

Here is a breakdown of our current tech stack at La Nostra Ciutat and my thoughts about each area of the system: 

POS

We are currently using Shopify POS in our retail stores and Shopify Advanced as our online platform. In March 2023 we switched our operations to Shopify having previously used VendHQ in stores (and before that, in the very beginning a stand-alone system from CaixaBank, this one tought us a lot!). We chose Shopify POS for the primary reason of connectivity. The truth is, most POS systems are the same, they have 90% of the same functionality, layout and aesthetic. What really sets one apart from the other is how inter-operable they are with other systems, and none are more inter-operable than Shopify. Everything connects with it. That means we are able to change our mind about other systems we are using and simply connect them in to the POS system in the future. 

The key from the POS system is that it does the basics really well (sell, keep data & ease of use), has strong inventory controls (and preferably forecasting features, or at least connectivity to systems that can do this), as well as being able to export your sales data automatically to a financial system for reconciliation against bank accounts. 

Our POS is still the master system for product information, however how long this will last for us I am not sure.

We left VendHQ (which I consider to be a better stand alone POS system for retailers in terms of functionality) purely becuase of its lack of connectivity with other systems. 

Financials

Our current financial system is Holded, a Spain based small business ERP system. The system is fine, it is certainly not the worst i’ve ever used and not the best either, but the price point is quite reasonable and it ticks many of the boxes needed for a financial management system. 

What are those boxes? Well, expense management, automatic bank connections (imports your bank history directly to the system for reconciliation), sales and invoicing, integrations with Shopify, wholesaling features, HR & payroll functions, country adapted taxes. 

These are all critical functions, but haivng a system adapted correctly for your countries’ taxes, bank integration and POS integration are the three areas which are going to make the biggest difference. We have previously used SageOne (which is fine for tracking expenses and sending B2B invoices, but not a lot else) and Quickbooks, the latter being my prefered option over all, but it’s lack of adaptation to Spanish accounting rules and taxes made the system diffcult to use in many cases (although the design and Ai on their bank reconcilliation is miles ahead of Holded & Sage). In the end we switched to Holded primaily for the tax functionality, even though the build of the software is not as good as the Quickbooks interface. If I were in the USA I would recommend quickbooks 100%. 

Web & eCommerce

The key here is to not duplicate your work and keep inventory levels synced. We have always run Shopify as our online platform, despite haivng previous experience on WordPress and WooCommerce. For us it was worth paying the extra €20 a month to have the hosting managed and not need to worry about things like SSL other technical aspects. We experienced a lot of headaches when using VendHQ as our POS and Shopify online through the direction and the information that you could sync between the two platforms. For example, we could only move over one product photo from Vend to Shopify, so would always have to duplicate the uploads between systems. Moreover, there were issues such as a product link getting broken and making a duplicate in one system and other such mishaps. 

Eventually we made the change to Shopify to simplify the workflow and it has been a good decision. Less systems to manage = less headaches!

There are other more flexible platforms out there than Shopify, but you will require more technical knowledge and more cost to manage that knowledge. Systems like Magento & PrestaShop will require full time programmers to build and maintain. Shopify seems to us like the best of both worlds. 

Inventory Management

Inventory is the biggest challenge of retail without a doubt. Get your inventory wrong and you are either locking up cash or losing sales, both ways bad. For us inventory has always ben a key focus, but we have not invested in the systems to make that happen. Excel has always been our friend, and for many years we were using complex excel sheets to do forecasting and inventory purchasing. This is only really possible if you come from a highly financial backgorund and have deep experience with Excel (thank you to my investment banking past!). 

For regular people a system is going to be much more functional. Therefore as we reached a size where we could start out hire people to deal with our inventory maangement, we have switched for the moment onto Shopify’s Stocky system. This is a system that is hard to recommend, but also one that is hard to turn down. It is included free with the Shopify POS sytem and gives you instant syncing with your inventory levels and sales. Many inventory systems will tell you that reail time views of stock and reorder points are groundbreaking things, but they are not. That is a basic feature. Stocky gives us automatic reordering using sales/item/day forecasts. The feature is ok. Not the best, but honestly better than expensive systems like Unleashed are able to offer (which is mindblowing to me). The Stock app itsself was obviously built as a Shopify app and has really not been improved since Shopify bought it about 5 years ago. This shows, and in the future we will change. However it is also not a bad system if you understand what you are doing. 

HR

When we first opened LNC out HR system was basically not having a system. In Spain the paper work involved with running a company is so complex that you are virtually forced to hire a legal and financial advisor from day one, so that is what we did and let them take care of the records. From there we passed on to using Excel to keep a list of our employees contracts and details, sending out the payslips via email each month. Now we are using Holded which has a built in (if not very simple) HR section which lets us manage the staff, their contracts and documents as well as payroll all in one. I would suggest using Bamboo HR or probably Deputy if you want to spend a little bit of money on HR systems (Deputy has one huge plus for retail which is auto-scheduling of staff into a rota, huge for retail). These systems will better enable you to manage the employee journeys in your company and offer things like on-boarding and training materials all for a relatively reasonable price. 

Payment Systems

From day one we have worked with Caixabank in Spain and used their external payment terminals. These have offered us the best rates (from 0.6% per transaction) but do come with the draw-back that the payment amounts need to be typed in by hand for every transaction. This does lead to some errors, but for the amount of money we are saving on payment processing it has been our preffered system (we are talking saving thousands a year). 

Integated payment systems are available with either a higher price or technical capabilities. Gradually in Europe the American providers of these services (Stripe, Shopify, Square etc) are lowering their prices to be more competitive with regional banks (dropping from 4%+ previously to around 1%ish now). As the gap closes it will become a no-brainer to have integrated paymetns, but until this happens we will continue to use external. If you wish to save yourself the hasstle of reconciliing the payments (which I would fully understand) then pay the extra processing fee and use integrated systems. 

Hardware

This is a tricky area in retail, primarily because all the specialist hardware is unnecessarily expensive. Feel free to pay over €10k for a label printer if you feel like, but that is not for us. We currently use the follwing hardware in our stores: iPad as a cash machine, Mac Mini for work, Star TSP143 reciept printer, Start Cash Draws, Zebra 220d label printers (plus a special driver so that they work with Macs), SocketScanner barcode scanners and other cheaper auxillary devices. 

I do not believe this is an optimal setup, but we have always wanted to have a fast operating system at the checkout and hence have used tablets. They give us extra computing power too and the ability to do extra activities with the cash register. In time I suspect we will shift to a more traditional set up, but for quick execution and a reasonably cheap price (under €2.5k for whole set up, whcih you can easily spend on a dedicated cash register alone) it has been a good option for us. 

Size of Company Matters

But the size and scale of your operation is likely to make different softwares more necessary than others. Let’s run over what I believe are the important services that a retail business should have depending on its size:

1 Person Retailers & Pop-Ups

If you are an individual who runs a store then you will likely have a smaller operation, be looking to keep your costs down and not be too bothered about user accounts and controls. In this case, my recommended stack would be: 

POS: Shopify/VendHQ/Square

Web: Shopify/Wordpress

Finance: Quickbooks/SageOne

Hardware: Laptop, Cheap Scanner, Star TSP Printer & Cash Draw

Stores with External Staff, 1-3 Locations

POS: Shopify/VendHQ/Square

Web: Shopify/Wordpress

Finance: Quickbooks

HR: Holded/Deputy

Hardware: Desktop, Tablet, SocketScanners, Star TSP Printer & Cash Draw

Larger stores with 2-5 Locations

POS: Shopify/VendHQ/Square

Web: Shopify/Wordpress

Finance: Quickbooks/SageOne

Inventory Management: 

HR: Excel/Onedrive

Payments: Integrated

Hardware: Desktop, Tablet or Touch Screen Register, SocketScanners, Star TSP Printer & Cash Draw

Multi-Store, Multi-City, Stand Alone Warehouse & Beyond

POS: ERP Dependent or Custom

Web: Shopify/Wordpress

ERP: Public ERP from SAP, Netsuite, Dynamics

Payments: Integrated Payments via Banks

Hardware: Touch Streen Computers, Integrated Payment Terminals, Recommended Hardware from ERP Providers

Enterprise

ERP: Private ERP from SAP, Netsuite, Dynamics

Everything Else: Hire a CTO. 

What Does The Future Look Like For LNC

Our current system sicking points centre around the mis-matched systems that we are running. Large companies use ERP systems (Enterprise Resource Planning systems) which are effectively everything I have described in this post in a single system. Given that they are a single system, they come with a much higher pricepoint generally when compared to the distinct stand alone systems, but also come with much more capabilities too. 

There are two key types of EPR system, public and private. Public systems are pre-configured systems that are built for the ‘standard’ company. That means that you will get a set range of capabiliies from the outset and can get up and running relatively quickly. Private ERP systems are the domain of large companies ($1bn+). These are cusom built systems which are tailor-made to fit their business practices. I’ll let you know what they look like when we get there!

One key thing to note with ERP systems is that they are not sold like a regular software app where you can just sign-up. These are gated gardens which require ‘implementation’ before they can be used. This is essentially a pre-configuration phase where a platform expert goes through the needs of your company, activates and customises the right modules for you and migrates data across from your existing systems. This work can often cost from €10k up to €50k, and is hence a large obstacle on the path to making a switch. 

However if you are able to partner with some of the larger ERP providers that you can meet through events, they will often help fast growing retailers to avoid most of these fees in order to get you onto their platforms. 

As LNC has grown we have begun to feel more of the pains of scale, thousands of SKUs, multiple locations, many bank accounts and providers. ERP systems are designed to solve these issues and it is where the future of our technology lies. 

If you have any questions about your retail tech stack, feel free to let me know and I will try to answer your doubts!

Learning a new skill is an exciting endeavour that involves progressing through different stages of development. The three-phase learning process—cognitive, associative, and autonomous—provides a roadmap for understanding how we acquire and refine skills. In this blog post, we’ll dive into each phase, exploring what they entail and how they contribute to skill mastery. Additionally, we’ll explore how to successfully transition from the autonomous phase to a new phase of higher learning. Let’s embark on this enlightening journey together!

Phase 1: Cognitive Phase – Laying the Foundation:

Every skill begins with the cognitive phase, where we lay the groundwork for understanding the task at hand. During this stage, it’s normal to feel a sense of novelty and uncertainty as we encounter new concepts, techniques, and challenges. We rely heavily on conscious thought, observation, and trial-and-error to gain a basic understanding of the skill.

Mistakes and errors are an integral part of this phase. They serve as valuable feedback mechanisms that guide our learning process. By embracing these mistakes as learning opportunities rather than setbacks, we can refine our mental models and adapt our approach accordingly. The cognitive phase is all about exploration, curiosity, and building a solid foundation for future skill development.

Phase 2: Associative Phase – Refining Through Practice:

Once we have a grasp of the basics, we transition into the associative phase, where our focus shifts towards refining our performance through deliberate practice and feedback. In this stage, we begin to recognise patterns, identify errors, and make the necessary adjustments to improve our execution.

The associative phase is characterised by a dedicated commitment to practice. By repeating the skill and receiving constructive feedback, we strengthen the connections between different components of the skill, honing our abilities. Although progress may seem slow and frustrating at times, it’s crucial to persevere and maintain a growth mindset. With each practice session, we inch closer to mastery.

Phase 3: Autonomous Phase – Skill Mastery Unleashed:

The autonomous phase is the pinnacle of skill acquisition. At this stage, our execution becomes automatic, effortless, and almost instinctive. We have internalised the skill to such an extent that it requires minimal conscious effort. Movements become fluid, and our attention can be directed towards higher-level aspects such as strategy and decision-making.

Achieving the autonomous phase is a testament to our hard work, persistence, and dedication. It represents a moment of triumph, where we have transformed a once unfamiliar skill into a natural part of our repertoire. However, reaching this phase is not the end of the journey; it opens doors to new possibilities for further growth and learning.

Transitioning to the Next Phase: Harnessing the Power of the Metronome

Having mastered a skill in the autonomous phase, you may find yourself seeking new ways to push the boundaries and venture into a new phase of higher learning. One powerful technique to facilitate this transition involves utilising the concept of a metronome—a tool used to increase the speed at which a skill is performed, challenging the limits of our abilities.

1. Setting the Metronome: Imagine the metronome as a symbol of progress and growth. It represents a constant beat, urging us to move beyond our current comfort zone. Set the metronome to a tempo slightly faster than the speed at which you have learned to execute the skill. This deliberate increase in pace acts as a catalyst for stepping out of the autonomous phase and embracing new challenges.
2. Embracing Discomfort: As the metronome ticks away at the accelerated tempo, you may initially feel a sense of discomfort and unfamiliarity. This is natural, as you are pushing the boundaries of your current capabilities. Embrace this discomfort as a sign of growth and resist the temptation to revert to your previous pace. Allow yourself to adapt and adjust to the new rhythm.
3. Focusing on Technique: As you strive to keep up with the metronome, maintain a strong focus on your technique. Speed should not compromise the quality of execution. Pay attention to the nuances, maintaining precision and accuracy while gradually increasing your tempo. By combining speed and precision, you create a powerful foundation for future skill development.
4. Incremental Adjustments: Incrementally increase the speed of the metronome over time. Start with a manageable increase, and as you become more comfortable, gradually raise the tempo. This progressive approach ensures a smooth transition into the next phase and prevents overwhelming yourself with an abrupt change in speed.
5. Analysing and Adapting: While pushing the limits with the metronome, closely observe your performance. Analyse areas where you may encounter difficulties or face resistance. These points of struggle highlight specific aspects of the skill that require further attention and practice. Use this feedback to adapt your training regimen and target areas that need improvement.
6. Mental Agility and Flexibility: Beyond physical adjustments, transitioning to a new phase of higher learning also requires mental agility and flexibility. Embrace a growth mindset, allowing yourself to embrace challenges, learn from setbacks, and persist in the face of adversity. Cultivate resilience and a willingness to step outside of your comfort zone.

By harnessing the power of the metronome, you can effectively break free from the autonomous phase and propel yourself towards new frontiers of skill development. Remember, it is crucial to strike a balance between speed and technique, gradually increasing the tempo while maintaining precision. The metronome serves as a powerful tool, challenging us to move faster than what we have learned, enabling growth, adaptability, and the mastery of new skills.

Hey there, fellow retail business owners! We all know that cash is the lifeblood of our stores, and effectively managing cash flow is essential for success. In this blog post, we’re going to dive into the world of cash flow modelling and explore how it can revolutionise your understanding of your retail store’s finances. I’ll share practical tips, personal anecdotes, and examples to help you harness the power of cash flow modelling and propel your store to new heights.

Understanding Cash Flow Modelling:

Cash flow modelling involves creating a detailed projection of cash inflows and outflows over a specific period. It’s like painting a picture of your store’s financial future, enabling you to make informed decisions and optimise your cash management strategies. Here’s how you can create a cash flow model for your retail store:

1. Identify Your Cash Inflows:

Start by identifying all the sources of cash inflows in your retail store. This includes revenue from sales, any financing activities, investments, and other income streams such as rental income or affiliate partnerships. Be realistic and consider historical data, market trends, and upcoming promotions or events that may impact your revenue.

2. Estimate Cash Outflows:

Next, estimate your cash outflows. Consider your operating expenses like rent, utilities, payroll, inventory costs, marketing, and other overheads. Don’t forget to account for loan payments, taxes, and any planned investments or capital expenditures. Be thorough and take into account both recurring and one-time expenses.

3. Analyze Historical Data:

Gather historical financial data from your store, such as sales reports, expense records, and bank statements. Analyse this data to identify trends, seasonal variations, and patterns in your cash flow. This information will provide a foundation for creating more accurate cash flow projections.

4. Project Future Cash Flows:

Using the data you’ve collected, project your cash inflows and outflows into the future. Break it down by month or quarter, depending on the level of detail you require. Consider factors such as sales growth, marketing campaigns, industry trends, and any significant changes or events that may impact your cash flow.

5. Monitor and Adjust:

Once you have your cash flow model in place, it’s important to monitor it regularly and make adjustments as needed. Compare your actual cash flow against the projected figures and identify any discrepancies. This will help you spot potential issues early on and make necessary adjustments to stay on track.

Harnessing the Power of Cash Flow Modelling:

Now that you have a cash flow model in hand, let’s explore how it can help you better understand and grow your retail store:

1. Forecasting and Planning:

Cash flow modelling allows you to forecast future financial scenarios and plan accordingly. For example, you can identify periods of potential cash shortages and take proactive measures such as securing a line of credit or adjusting inventory levels to maintain a healthy cash flow.

2. Decision-Making and Risk Management:

Cash flow modelling provides valuable insights for making informed decisions. For instance, you can evaluate the financial impact of expanding your store, launching new products, or investing in marketing initiatives. It also helps you identify potential risks and develop contingency plans to mitigate them.

3. Optimising Inventory Management:

By understanding your cash flow patterns, you can optimise your inventory management. For example, you can adjust your purchasing strategy to minimise carrying costs, reduce stockouts, and ensure you have sufficient inventory during peak demand periods.

4. Negotiating with Suppliers:

With a clear understanding of your cash flow, you can negotiate better terms with suppliers. For instance, you can negotiate extended payment terms or discounts for early payments, which can help improve your cash flow position and strengthen your relationship with suppliers.

5. Capitalising on Growth Opportunities:

Cash flow modelling helps you identify opportunities for growth and expansion. For instance, if your cash flow projections indicate a strong financial position, you may consider opening a new store, investing in technology upgrades, or launching an online sales channel to tap into new markets.

Personal Example: My Cash Flow Epiphany

From my time studying entrepreneurship at university, I have long known how to build complex cash flow models for businesses. Where I had struggled was the application, how do you make decisions based on the information you have? If your cash flow model tells you that in 60 days time you will have a large float of cash in the bank, what do you do with that? Leave it sitting for safety? Spend on growth? These were the real questions that needed answering. Once I realised this, I would create upside and downside cases for my projections, and experiment with different investment cases in my projections so I could understand the possibilities of my various investment opportunities. I wholeheartedly recommend making these different cases to analyse your opportunities going forward, because what is the point of understanding your likely cash position in 2 months time if you aren’t acting upon that information!

Conclusion:

Cash flow modelling is a powerful tool that every retail business owner should embrace. It provides a clear picture of your store’s financial health, helps you make informed decisions, and unlocks opportunities for growth. By understanding your cash flow patterns, forecasting future scenarios, and leveraging the insights gained, you can take control of your store’s finances and steer it towards long-term success. So, roll up your sleeves, create your cash flow model, and let it guide you on the path to financial mastery and retail greatness!