The simplest sum in your business

Five issues ago we started with the customer standing in your shop. Since then we've worked out what a product earns you, what a conversation costs, and what your own customers don't know about you.

This week, the sum that ties all of it together. It takes two numbers you already have, and almost nobody divides them.

Total retail sales ÷ number of retail transactions = what your average customer spends.

That's it. Your till will give you both numbers for last month in about two minutes.

One rule makes it meaningful: take the NHS side out. Prescriptions, services, dispensing income — exclude all of it. Otherwise the number is dominated by things the NHS decides, and you learn nothing about the half of the business you actually control.

Because owners watch two other numbers instead: how many people came in, and what the day took in total.

Footfall feels like the important one. It's also the most expensive to change and the least in your control. The weather, the GP surgery, the high street, a chain opening nearby, a pharmacy closing down the road — none of that is yours to decide.

The average basket is the opposite. It's small, unglamorous, and entirely yours.

Here's an illustration. Use your own numbers and the shape holds.

Say you take 250 retail transactions a day, six days a week.

Now the important part, the one Issue 2 was about.

That £39,000 is revenue, not money. If those extra sales run at a 30% margin, the actual gross profit is around £11,700 a year.

Still a significant number for a change of 50p. But notice how different the two figures are. Anyone who quotes you the first number without the second is selling you something.

To add 50p to the average basket you need one of three things, and you already have all of them from the last four issues:

Know what each product earns you. The ten-product list. If your team is going to recommend one more thing, it should be a thing worth recommending.

Decide who says what, and when. The one page with your three most common counter questions. Without it, what gets recommended is decided under pressure by whoever is nearest.

Tell people what you can help with. The one sentence, on the bag and at the counter. People buy what they know you do.

None of those needs a marketing budget, a refit, or more people through the door.

You'll see figures quoted for what a pharmacy's average basket "should" be. Treat them carefully. Real figures vary enormously by location, by range and by how much of the shop is given over to retail at all, and reliable published numbers for UK independents are hard to find.

So don't compare yourself with anyone. Compare yourself with yourself. Last month against this month is the only benchmark that can't mislead you.

Work out last month's retail average basket. Write it on a card and put it where you do your paperwork.

Then do it again at the end of this month, and the month after. Three data points and you can see a direction. One data point is just a number.

Only the sum. Nothing else.

Then look at it honestly and ask one question: if that number went up by 50p, would anything about how your shop runs have to change? Or would it simply mean your team recommending one more thing they already believe in?

Most owners find it's the second. Which is why this is the cheapest growth available to you.

Hit reply and send me your number. I'll share the range anonymously in a few weeks so you can see where you sit — and I'll tell you honestly how many replies it's based on, because a range built from four pharmacies isn't a benchmark and I won't pretend otherwise.

Next week: why the busiest month of your year is often the least profitable, and what the winter rush actually does to your margins.

Pollyanna