Snow retailers were encouraged to “Turn on Your Financial Headlights” in day three’s morning seminar at the TransWorld SNOW Industry Summit.
The workshop wasn’t as well attended as it could have been because of a concurrent specialty retailer’s panel happening next door. However, for those who did attend the session titled “Retail Business: The Secrets To Successful Financial Management” found it was invaluable.
Presented by Co-owners of The Retail Owners Institute Patricia M. Johnson and Richard F. Outcalt, the workshop was a crash course in understanding financial planning. “Retailing is really fun—if you don’t wake up at night worrying about paying the bills,” says Outcalt.
The pair explained if a small retailer learns to do a little financial planning and forecasting they can be much more competitive than the big guys. Johnson and Outcalt showed how the market reflects on a store’s income statement (or P&L’s) which directly corresponds to the balance sheet.
Additionally, because lenders require that a small business owner’s personal finances are directly linked to their business financially—things can get difficult if you don’t plan ahead. “The biggest dilemma for most small retailers is that net profits go down as you increase a salary for yourself,” says Johnson.
Johnson and Outcalt suggest controlling inventory (or a store’s assets) through a monthly planned open to buy. Retailers should determine the difference between an items monthly sales plus the desired ending inventory and subtract the beginning inventory (or what is on hand). This number will give retailers a good open-to buy number.
Using a workbook sheets included in the SIS handbook, the pair encouraged retailers to make copies and use the ROI system to get a better gauge on their stores.
After explaining everything on paper, Johnson and Outcalt offered the retailers in the audience a second solution—a computer program. Their Retail Strata:G program handles all of the retail financial projections explained in the session.
Everyone was murmuring as Johnson walked retailers through an example on the Financial trainer program available on www.RetailOwner.com. “It seems like a valuable tool, for sure,” says Wes Debow owner of The Boardgarden in Napa Valley, California.
Others were equally impressed. One audience member even raised his hand to say that he’d previously been spending 1,200 dollars on an accountant who couldn’t help him with any of the information available on the program.
The TransWorld SNOW Industry Summit had gathered more than 300 executives from snowboard and ski manufacturers, retailers, and resorts to discuss issues facing the group. Produced by TransWorld SNOWboarding, with partners Mountain Sports Media and SIA, the SNOW Industry Summit was held April 1 to April 4, 2004.