web site updated 3 July 2007
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web site updated 3 July 2007 |
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Welcome to Retail Business 101! NEW ON RETAIL BUSINESS 101! Read my retail
blogs about ePoS systems, retail statistics and more! Retail Business 101 is a consulting firm that provides a variety of services to golf shops and apparel retailers as well as to provide assistance to software providers and resellers in the retail industry. We can also provide web site development for small businesses. In the past months, Retail Business 101 has also been working with small businesses that are struggling to get sales revenues to acceptable levels. Many people come up with a good business idea, product or service, but just cannot get customers through their selling efforts. Selling is more than just a presentation and a proposal and we can help point you in the right direction. This site also contains informative articles relating to business-smart retailing. To read the most recent article that was written for a franchise client on Accounting Issues, click here.
NEW SISTER WEBSITE I have launched a new web site that is devoted to retail in the golf industry. Please visit it at
Reach Me on Skype! To make it easier (and less expensive) to reach me, I have added Skype as a way to call me. If you are a Skype user, you can call me directly on Skype--or, you can call me in the US at +1.760.208.4653. From the UK, call me at +44.207.871.0619. (My office number is unchanged at +1.760.724.0385)
Right now... If you have Skype, just click on the icon above to initiate the phone call. Even if I am unavailable, away or offline, you can still leave me a message on Skype voicemail any time of day or night.
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Alan Fisher Addresses Première Golf Apparel Buyers Conferences in Europe Once again, Alan Fisher addressed golf apparel buyers at the Première Golf Apparel Conferences and Fashion Shows in July and August. In past years, Alan has addressed conferees in Marbella, Spain and Glasgow, Scotland. This past year, Robert Fairbairn of Première Golf led a golf fashion road show through Paris, Cologne (Germany) and London. For further information about the conferences, please click on the following link: Première Golf The top two photos were taken at the Henley Golf Club in Henley-on-Thames, UK. Robert Fairbairn and Alan were getting ready to be defeated by Henry Fairbairn (Robert's teenage son) in a golf match. By the way, it was not even close. (OK, so we found some time for fun.) On the second day, Robert and I got sweet revenge by defeating Henry and Lynn McCool, director of golf at the Hilton Templepatrick in Northern Ireland. To be fair, Lynn (as in Ms. Lynn McCool) played the same tees as the males.
Below left, there are pictures from the first of several private fashion shows and dinners that were hosted by adidas. From left to right, Tony O'Neill of adidas with Cherie and Ivan Norman (Managing Director of Nevada Bob's in Europe) at the adidas reception at Euro Disney. On the right, one of the seminars in London. See, I did work.
Lastly, photos from The Brabazon at The Belfry in Birmingham, U.K. Stephen Follett, the new director of golf operations for Marriott properties in the U.K., kindly treated me and two English friends (Nick and Barry, left to right in the bottom pic) to a round of golf. Stephen is shown in the bottom left pic as he prepares to hit the shot that will ultimately win the competition for Stephen and me over Barry and Nick--thanks to a couple of three putts by them. (We won't talk about my contribution to the finishing hole.) The Brabazon has been the site of four Ryder Cup competitions, mostly unfriendly to the Yanks (or Septics as we are known in "rhyming slang").
There's just no green like an English green.
Première Golf White Paper The Première Golf White Paper is now available to qualified individuals who participated in the conferences in either Glasgow, Paris, Cologne or London. Please send an e-mail to info@retailbusiness101.com requesting your desire to have this document and I will send it to you. By the way, your e-mail address will not be used by any other company and I promise not to send anything your way except for the requested document(s)--or a good golf joke from time-to-time. The e-mail address above is not a hyperlink and you will need to copy it to your e-mail address line. Robots search web sites for e-mail addresses so that they can spam them to death and I get enough as it is.
For retailers, RB101 specializes in golf shops and men's and women's apparel stores. Mr. Fisher has helped many retailers to significantly increase profit margins while reducing inventory. Mr. Fisher has trained buyers to understand retail statistics at many of the top resorts in the United States and beyond. Services include:
For more details on golf shops, click
here.
For software providers and resellers in retail, RB101 offers:
For more details, click here.
For small businesses interested in growing their businesses through increased sales, click here.
In my first conversations with some of you, I recognize that our knowledge of accounting needs to improve. Therefore, we need to review some basics tenets of accounting to understand accounting’s impact on some of our decisions. Specifically, we will address the Profit and Loss Statement. After a brief interlude on QuickBooks P&L Statements, the sermons will begin. (Pay attention, this will be on the final exam.) QuickBooks Tip: Rather than talk about dollars on the P&L, we will focus on the percentages. None of the QuickBooks reports that I have seen from you include percentages, but you can easily add them to Modified Reports in QB. In order to add percentages, go to Reports, then Company & Financial and select Profit & Loss Standard. Once you modify the dates for the period you wish to see, select Modify Report and you will find, down near the bottom of the page, a selection for Percentage of Income. Check that box and say OK. When you leave the report, OB will ask if you want to Save in Memorized Reports and answer Yes. Then Save it as Profit & Loss % AND Save it in the Company folder. Now you can retrieve this new report in Memorized Reports and modify the date range to produce P&L's with percentages. The first sermon relates to making sure that each of you stays up to date with your Quickbooks. I REQUIRE IT. By the end of each week, I require that all invoices must be entered with the proper due dates. For those of you who have attempted to self-teach yourself Quickbooks, I recommend that you find a local accountant who offers training classes in Quickbooks. I use Quickbooks for Retail Business 101, Inc. My accountant, who is a part of a large firm in SoCal, recommends Quickbooks for small businesses. I only point out he is part of a large firm because it was still very affordable. The firm offers monthly group training classes for QB, but I was able to schedule a small one-on-one training class to help me set up the system for my business and then establish procedures for accounts payable and payroll. The cost was around $100 and well worth it. I participate in Basic Payroll service from QB which is also affordable. This gives me the updated tax tables and information for an annual fee. The second sermon relates to how we read the Profit & Loss statement. On the P&L, the top of the report shows Revenue or Income. All percentages are calculated as a percentage of this number. Therefore, Revenue is always 100% (100% of itself). The next line is Cost of Goods Sold (COGS). It represents the money that you paid for the items that were sold. COGS is also represented as a percentage of sales. Do not confuse COGS with our Initial Markup Percent (what we actually sold it for instead of what we hoped to sell it for).
So for this month (theoretically), we have $10,550 to spend on all of our operating expenses. In order for us to be profitable, the sum total of our operating expenses cannot be more than $10,550 or 42.2% of sales. When we analyze Gross Profits and their relationship to Operating Expenses, we can deduct the percentages and review how we will eventually arrive at Net Profits. For example,
These are the only set percentages that you have. For now, they will always be 6.0% and 5.0%. If we subtract 6.0% and 5.0% from 42.2%, we now have 31.2% left to pay the other operating expenses. If sales increase, the actual dollars for Franchise Royalties Fees and Advertising Fees will increase, but those two percentages will not change. In the next example (which includes dollars on the mock report), with $25,000 in sales this month, we pay $1,500 in Royalty Fees and $1,250 in Advertising Fees. If Sales increased to $50,000, then those Fixed Percentage Fees would be $3,000 and $2,500 respectively. Our other Operating Expenses (relatively "fixed") do not have a direct correlation to Total Sales. The other Operating Expenses (in terms of actual dollars) will not necessarily change as a result of Sales increases. For example, our rent does not increase in dollars if Sales double. Our payroll might increase (but not double) because we need more staff to handle the sales volume.
This exercise is to help us better understand the relationship between our Operating Expense percentage and the gross profits we have to make to cover those expenses. Let's review The Big Picture.
In The Big Picture, if Sales increase: Ø the Total Sales% will not increase (since it is always divided by itself), Ø the COGS% and Gross Profit% will likely stay close, unless you took significant markdowns, Ø the Operating Expenses % will decrease (because the Fixed expense dollars did not change and we are dividing by a large Sales number, Ø Net Profits should increase. In The Big Picture, if COGS decreases: Ø the Total Sales% will not increase (since it is always divided by itself), Ø the Gross Profit% will increase (it is calculated as Sales Minus COGS), Ø the Operating Expenses% will stay the same (because the Sales number we divide into the Expenses did not change), Ø Net Profits will increase because we have more Gross Profit dollars to pay operating expenses. In The Big Picture, if Operating Expenses decrease: Ø the Total Sales% will not change (since it is always divided by itself), Ø the COGS% and Gross Profit% will not change, Ø the Operating Expenses % will decrease, Ø Net Profits will increase because while Gross Profits did not change, the Expenses% we paid decreased. Therefore, our solutions to lack of profits are as follows: 1. Increase sales volume. As sales volume increases, the gross profit dollars increase, allowing us to pay “fixed” operating expenses. As a result, the percentages for “fixed” expenses will reduce. 2.
Decrease Cost of Goods Sold. If we can decrease our Cost of Goods Sold,
even without increasing Sales, we increase the dollars that we have to pay
Operating Expenses. 3. Decrease Operating Expenses. At the top of “fixed” operating expenses are Rent and Payroll. Since these normally represent the largest singular items on the P&L, they are the ones that we have to watch closely. Since we have lease agreements for rent, Payroll may be the only Operating Expense over which we maintain a high degree of control. The third sermon is a simple statement if you understand the relationships referenced above. If we look at our Operating Expenses as a percentage of Sales, we cannot afford to carry vendors or products lines that do not consistently provide us with a Gross Margin% that is higher than our Operating Expense%. Simply stated (using the example above), vendors who provide us with products that earn more than 39.5% in gross profits, allow us to gain net profits. Those whose gross profits are below that point, cause us to be in a loss situation. Makes decisions much easier, doesn't it? It is important to review these percentage relationships over a longer period of time (such as a 12-month period or a selling season) since an individual month may not be indicative of the year. For example, the first month of a new season should have relatively low markdowns while the last month of that season will have higher markdowns. The COGS for those months will be low for the first month and high for the last month. I hope this posting helps you understand some of the items that I will be discussing with each of you individually about your business. It is important that you understand these concepts (particularly the third sermon) as we go forward. If any of this is unclear, please call me and let’s review on the phone.
If you need help, call toll free within the US, at 866.32.RB101.
Contact us by e-mail at info@retailbusiness101.com We do not put a hyperlink for our e-mail address due to the number of programs that search the Internet for e-mail addresses to further perpetuate spam and viruses. Please copy and paste the e-mail address to your e-mail. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
