JRM-logo-2015

  

Planning Success for
Independent Business Owners

Ensure a Happy New Year

Ensure a Happy New Year… and create your PLAN for Success

Written by David Fass, Senior Business Analyst and Consultant

 

 

Many dealers fell short of expectations in 2015 and just hope 2016 will get better. Unfortunately, you can’t pay your vendors or go to the bank with hope.

Start by creating a plan in each department for success:

·        Begin with a realistic and conservative budget, basing revenue projections upon the criteria that determines sales volume.

·        Work with the sales team to set goals for close ratio and average sale (don’t forget extended warrantees) and then determine your traffic goal.

·        Determine where and how you can increase margins.

·        Challenge all expenses to determine where expenses can be cut or productivity improved.

·        If this doesn’t produce the net profit desired, determine what you have to do to get there. It is some combination of increasing revenue or gross margins and/or reducing expenses.

·        Remember, a budget is based upon delivered sales, so take into account your un-delivered backlog because that will affect your delivered sales during the 1st quarter.

 

 

Analyze the productivity of your inventory by creating a Category Performance Report:

·        What were your overall gross margin %, turn rate, and gross margin return on inventory (GMROI)?

·        Determine which categories worked well and which under-performed.

·        How does this compare to industry standards and your own past performance?

·        What is each category’s % of sales, % of gross margin dollars, % inventory, and % of display space?

·        Re-engineer categories that under-perform by reviewing your Assortment Plans and making necessary changes.

·        Create a Category Projection Report for 2016 and an Open-to-Buy Report to help you manage your inventory to a turn rate or GMROI goal by not over-or under buying by category.

·        Dead-inventory keeps you from investing in the right product and possibly causing productivity problems in the warehouse, so find out where it is and how much is there.

·        Turn that into cash which will help cash flow!

·        Maximize your return on investment in your square footage of display and get rid of non-producing merchandise.

·        Create an Item Elimination Strategy which will help keep your inventory in line which in turn will help you attain your GM% and turn rate goals.

 

 

The other very large investment that most dealers have is your employees:

·        Do they meet your expectations?

·        If so, do you let them know frequently so that they feel appreciated?

·        If not, what are you planning to do about it?

·        Are you open to their suggestions and comments?

·        Have you conducted individual Evaluations or scheduled them yet?

 

 

This isn’t everything that needs doing, but it certainly will get you going in the right direction in 2016.

 

David Fass is a senior business analyst and consultant with JRM Sales & Management, Inc with over 40 years of retail home furnishing experience. JRM Sales & Management, Inc specializes in all aspects of retail management and these are just some of the tools that they help implement with their worldwide clients.