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With 2022 now in the rearview mirror it is time to reflect on what worked well and what needs improvement in the coming year. Consider the following guideline as you begin 2023.
- Health
- Long-term planning
- Expenses
- Inventory
- Vendors
- Staffing
Health
Make this priority #1. Without good physical mental and financial health nothing else really matters. If you can’t take care of your own health taking care of your business health is going to be difficult if not impossible. Staying healthy involves proper nutrition exercising regularly and getting plenty of rest. This sounds basic and perhaps even trite but you would be surprised by the number of store owners that don’t take care of their health and pay a hefty price for not doing so.
Is your business financially fit? Now is the time to assess your financial health. Are you cash flow positive? If so did you plan to be that way or did you get lucky? Lady Luck can be fickle and can turn against you quickly. Doing a cash flow plan regularly is a simple exercise that can quickly reveal where potential problems exist. If you do not have a good cash flow form feel free to contact me and I will send you one.
Warning: In most cases if you continually use current season sales to pay previous season’s invoices you have a problem!
Think Long-Term
Most of us get so wrapped up in solving immediate issues that we forget to plan for the future.
Immediate Problems
We often focus so much on addressing immediate problems (aka putting out the small fires) that we do very little long-term planning. I bet many of you will spend more time planning your vacation than you will giving thought to the first quarter of 2023 let alone two to three years from now. Management One President Mike Alic summed it up perfectly by saying “If you don’t lay the foundation for the next big thing in your business today you won’t be ready to make the move tomorrow.”
Examples that require long-term planning might include a remodel a new space adding another location a new POS system overhaul of the website or a major shift in personnel to name a few. What long-term projects are you currently planning?
Operating Expenses
January is the absolute best time of the year to review the year-end profit and loss statement. This document is too critical to your ultimate success to be simply filed away. You should have industry benchmarks for all major expense categories as well as initial markup and margin expectations. You will want to make sure that your year-end results are in line with industry averages and that there is sufficient spread between gross margin and total expenses. If you are not comfortable reading this statement or how to interpret its results I can easily show you in five minutes. All you have to do is reach out.
Inventory
When it comes to reviewing inventory there are several considerations at year end. Reviewing the existing class structure is a logical starting point. Does the current category hierarchy fit your existing business? I review class structures regularly for stores. What I typically find is that they rarely change. It is not uncommon to find classifications in a system that have had very little if any activity for years in some cases. These should be eliminated needless to say. On the other hand sometimes a category or class has grown to the point that…
The Data Provided
The data provided is so cumbersome that the information is of little value. This would be an example of a class that should be broken down into smaller more controllable sub-classes. Planning at a smaller level allows the merchant to make better buying decisions and identify potential problems more quickly.
Housekeeping Tips to Do NOW
Ritchie Sayner
In most cases if you continually use current season sales to pay previous season’s invoices you have a problem!
Continued on page 6
Published in the January/February 2023 issue of Shoe Retailing Today Copyright © 2023 National Shoe Retailers Association Tucson AZ www.nsra.org. All rights reserved.
Inventory Management
If you have taken a year-end physical inventory January is a good time to reconcile the inventory. Make certain you know where and why shrinkage problems exist. Without this knowledge you can’t address the problem. It is also a good time to review any procedures related to inventory accuracy. This could include:
- Transfers between stores
- Receiving practices
- How customer returns and vendor returns are handled
- If markdowns are being recorded properly
Vendors
Now that the year is complete the current resource matrix should be evaluated. If you are a store that finds itself overbought often perhaps you are carrying too many vendors. This can also lead to duplications in assortment which is a major contributor to profit-eating markdowns. Supply chain disruptions customer service and shipping accuracy need to be taken into account. Use a vendor scorecard that takes into consideration not only sales but margin and ROI (return on investment). This is an excellent tool for vendor negotiations if needed.
Staffing
Another important area to review is staffing.
Current Staffing Needs
Do you have the right people in the right seats on the bus as Jim Collins describes in his management book “Good to Great”? A great employee will not help the organization in the best way possible if his or her talents are not utilized effectively. Good sales associates do not necessarily make good managers and good buyers don’t always make good merchandise managers. All of these positions require completely different skill sets.
Year-End Review Process
The points just provided make a good template to begin a year-end review process. Any of these topics would provide excellent material for management meetings. By reviewing these six major areas and implementing any needed changes you can set up 2023 to be a banner year.
- Ritchie Sayner is with Advanced Retail Strategies LLC an affiliate of Management One. Sayner’s book Retail Revelations: Strategies for Improving Sales Margins and Turnover (2nd Ed.) is available on Amazon. He can be reached at advancedretailstrategies.com.
Otherwise you’re not really delegating – you’re micromanaging. Micromanaging is one of those red flags of bad management that tends to drive good people away.
Creating a Sense of Community
People crave feelings of community everywhere including at their workplace. If your team members don’t feel ownership over their duties they won’t feel inspired to stay. Likewise if they don’t feel heard or like they are being included in the decision-making process they’re going to cut and run.
Remove the Roadblocks to Change
People are resistant to change. If they’re complacent in how they’ve been operating they are not going to want to switch things up.
Next time you’re in a conversation outlining something you’re trying to change think of it in a coaching method. Clarify communicate and bring them to an understanding of why we need the change to happen. Align the conversation to the Promise. Change is never easy and people always resist it.
Clarity creates confidence and…
Confidence Ignites Momentum
When you’re coaching and creating clarity you’re giving your team confidence. If you put yourself in their shoes and empathize with their pain points you can find thoughtful questions to ask them that serve to move the conversation forward. Once you have earned their trust employees will begin to share more.
The Five Ps
You can use the Five Ps to help you alter your leadership style to coaching. If you help your team understand the ultimate Promise of your business it will be easier to align your Products and your Processes get your People behind the mission and your Profit will come.
If you’re ready to make some changes in your business simply go to www.SpeaktoPete.com and book a chat with Pete.
- Pete Mohr helps entrepreneurs transform their frustrations into freedoms by using a variety of frameworks that help them cut through the chaos and overwhelm of running a business.
- He’s refined his tips tools and techniques within his own businesses over the past 27 years and loves sharing them so others can live the life they deserve as business leaders.
- Pete can be reached at pete@mohr.coach or www.mohr.coach.
It’s important to know that coaching your team instead of just convincing them doesn’t mean you’re not holding them accountable. If they understand what’s expected of them and how it relates to the Promise they’ll start to take pride in what they do.
Mohr continued from page 4
Sayner continued from page 5
Article Summary
The article emphasizes the importance of prioritizing health and long-term planning for business success in 2023. It provides guidelines on assessing financial health managing inventory evaluating vendor relationships and optimizing staffing to enhance business operations. The piece also highlights the significance of creating a sense of community and removing roadblocks to change within organizations.
“If you don’t lay the foundation for the next big thing in your business today you won’t be ready to make the move tomorrow.” – Mike Alic
Real-World Examples of Long-Term Planning and Health Management
The following examples illustrate how businesses can apply long-term planning and prioritize health to enhance their operations and ensure sustainable growth.
- A retail company decides to implement a new inventory management system to address shrinkage issues and improve efficiency. By planning and executing this project over the course of a year the company reduces inventory discrepancies by 30% and improves cash flow.
- A small business owner prioritizes their health by setting aside time for regular exercise and stress management activities. As a result they experience increased energy and focus leading to better business decisions and a 15% increase in productivity.
- A chain of stores plans to expand by opening a new location. They conduct thorough market research and financial planning over two years ensuring that the new store aligns with their long-term goals and contributes to a 20% growth in overall revenue.
