Starring Role

This story appears in the August 1996 issue of Entrepreneur. Subscribe »

Your cash register rings up sales all day long. But did you know it can ring up sales in more ways than one? Used correctly, your cash register has the potential to generate a wealth of information-information you can use to fine-tune your sales efforts.

You need the right tools to harness that information, however, and that's where point-of-sale (POS) software systems come in. POS software records each sale when it happens, so your inventory records are always up to date. Better still, you get much more information about the sale than you could gather with a manual system. By running reports based on this information, you can make better decisions about ordering and merchandising.

Consider just a few of the things you can do with a POS system:

You can analyze sales data to maximize your return on investment. By knowing how well all the items on your shelves sell, you can adjust purchasing levels to prevent running out of popular items and letting unpopular ones gather dust. You can also use sales information to monitor the effects of markdowns and price adjustments, as well as modify pricing to improve inventory turnover.

You can maintain a sales history to help adjust your buying decisions for seasonal purchasing trends.

You can track sales activity by salesperson to compute commissions and monitor performance.

You can improve pricing accuracy by integrating bar-code scanners and credit card authorization ability with the POS system.

You can maintain customer histories and mailing lists for promotional and marketing purposes.

Popular POS software systems include Business Controller Plus, from MicroBiz; The General Store, from Crichlow Data Sciences; Keystroke POS, from Specialized Business Solutions; and SellWise, from CAP Automation. These systems enable you to use add-on devices at your checkout stations, including electronic cash drawers, bar-code scanners, credit card readers, and receipt or invoice printers.

POS packages frequently come with integrated accounting modules, including general ledger, accounts receivable, accounts payable, purchasing and inventory control systems-as well as modules that keep track of employee time and attendance, payroll and security. In essence, a POS system is an all-in-one way to keep track of your business's cash flow.

The Right Choice

The features you need in a POS system depend to some extent on what you'll be using it for. In general, features to consider include the following:

Ease of use. The last thing you want to do is spend a lot of time training employees to use the software. To get them up and running quickly, look for software with a user-friendly graphical interface.

Entry of sales information. Most systems allow you to enter inventory codes either manually or automatically via a bar-code scanner. Once the inventory code is entered, the systems call up the standard or sales price, compute the price at multiple quantities and provide a running total. Many systems make it easy to enter sales manually when needed by letting you search for inventory codes based on a partial merchandise number, description, manufacturing code or vendor.

Pricing. POS systems generally offer a variety of ways to keep track of pricing, including add-on amounts, percentage of cost, margin percentage and custom formulas. For example, if you provide volume discounts, you can set up multiple prices for each item.

Customers. Most of these packages let you add new customers to the system as you go. Some feature lookup tables that provide information about existing customers when you type in their names, addresses or other data.

Updating product information. Once a sale is entered, these systems automatically update inventory and accounts receivable records.

Sales staff records. Many POS systems automatically track sales commissions and goals.

Sales tracking options. Different businesses get paid in different ways. For example, repair or service shops often keep invoices open until the work is completed, so they need a system that allows them to put sales on hold. If you sell expensive consumer goods and allow installment purchases, you might appreciate a loan calculator that tabulates monthly payments. And if you offer rent-to-own items, you'll want a system that can handle rentals as well as sales.

Security. In retail, it's important to keep tight control over cash receipts to prevent theft. Most of these systems provide audit trails so you can trace any problems.

Taxes. Many POS systems can support numerous tax rates-useful if you run a mail order business and need to deal with taxes for more than one state.

Special Reports

Perhaps the most valuable way POS systems help you gain better control of your business is through their reporting features. These reports basically let you slice and dice sales data in a variety of ways to determine what products from what vendors are selling best at what time. Using this data, you can figure out everything from the optimal ways to arrange shelves and displays to what promotions are working best and when to change seasonal promotions.

All these packages include a wide variety of reporting capabilities. These include sales, costs, and profits by individual inventory items, by salesperson, or by category for the day, month and year to date. Special reports can include sales for each hour of the day for any time period. You can also create multiple formats for invoices, accounting statements and price tags. Additional reports include day-end cash reconciliation worksheets and inventory management. You can even print reports showing employee time and attendance.

Not every package offers all these features. You'll have to examine each one to see which comes closest to meeting your needs. Also remember that every business is unique; you may find that none of the available off-the-shelf systems meet all your requirements. Industry-specific POS packages are available-for auto repair shops, beauty and nail salons, video rental stores, dry cleaners and more. In addition, some POS system manufacturers will tailor their software to your needs.

So, whether or not you find a package that meets your requirements "as is," rest assured that with a little effort, you'll find one that works for you.

Contact Sources

CAP Automation, (800) 826-5009;

Crichlow Data Sciences Inc., (800) 678-4535;

MicroBiz Corp., (800) 637-8268;

Specialized Business Solutions, (800) 359-3458.

Cheryl J. Goldberg is a former editor of PC Magazine and has reported on the computer industry for more than 13 years. Write to her in care of Entrepreneur, 2445 McCabe Way, Irvine, CA 92614. You can also reach her via CompuServe at 70641.3632@compuserve.com or via MCI Mail at 367-2295.