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What Should Your Sales Be?

Thinking about opening a new store? Wondering what your sales might be?

Here is the easiest method for estimating expected sales:

Market Potential
First find out how much business can potentially be done in your market. To do this you only need to find the national sales figures for your industry (note: for some industries this is easier said than done).

Take that national sales figure and divide it by the US population. That gives you sales per person.

$22.1 billion divided by 308 million people = $72
Then simply multiply that result times the number of people in your expected trade area.
$72 x 150,000 people = $10.8 million
Now you know what the Market Potential is. Your expected sales will most likely start in the 3-5% range, maybe higher if there is no indie competition, maybe lower if there is indie competition or you are saturated with highly effective big box stores.
What Size Store?
From this figure you can get a good estimate of how big a store to build. You just need two numbers… Lease Rates in your area and/or Sales per Square Foot for your industry.
Lease Rates: To be profitable you have to be working for yourself and not the landlord. If the rent for the year is more than 10% of your expected sales, you’re working for them, not you. You basically have three options:
  1. Look for a smaller space
  2. Look for a cheaper space
  3. Look for a different market
But be careful of those three options. The cheaper space is usually in a bad location and retail , like real estate, is all about location, location, location. The smaller space might work, if you have room to show enough product to justify the sales.
That is why knowing the sales per square foot for your industry is helpful. Let’s say your Expected Sales are $500,000. If your industry average for sales per square foot is $200, then a 2500 sq ft store should work fine. Only lease a bigger store if it is both affordable and in a great location.
Everyone thinks your store “would be great in our neighborhood.” Yes, great for them. Do the math and you’ll know if it will be great for you, too.
-Phil

Short Term Pain for Long Term Gain

What sacrifice are you willing to make today to help you succeed tomorrow?

At some point this spring I am having surgery to correct some physical abnormalities that will have a profound impact on my health going forward. The procedure is not fun, and the recovery is worse. Two weeks of excruciating pain followed by two more weeks of slow recovery, followed by 4 months of getting used to the new me.

I spent most of last night reading reports online of how bad those first two weeks are, a true living nightmare by everyone who experienced it. Yeah, it’s scary.

But what is two weeks compared to 6 decades?

Michigan Governor Rick Snyder has proposed sweeping changes in the business tax structure in Michigan. In the short term, it’s going to hurt. But it is necessary to the long term health of the State.

I just posed the same scenario to one of my major vendors. I showed them how their current practices, while profitable now, would hurt them long term and gave them some suggestions on how to fix those problems. The fix will hurt them short term. But it won’t hurt nearly as much as going out of business will.

You have this problem in your business, too. There is a change you need to make. You don’t want to, because you know it’s going to hurt in the short term.

But ask yourself this question… How long do you want to be in business?

Kinda puts it all into perspective, doesn’t it?

Go ahead and make the changes you need to make. You already know how it’s going to work out in the long run. You’ll get done. Everything will be okay. And you’ll wish you had done it a whole lot earlier.

-Phil

Finding Help in Strange Places

Yesterday my wife had seven friends over for “Healthy Group”. Eight women around a table talking about vitamins, allergies, hormones and health care. Sharing stories, articles and anecdotes about the latest findings in the worlds of regular and alternative medicine.

None of them are doctors (although I think one of them stayed at a Holiday Inn Express recently) and none of them think they are the be-all-know-all expert when it comes to this stuff. But together they are learning at a rate far greater than they could all by themselves.

There is strength in numbers, especially when everyone is looking out for each other.

Tomorrow I’ll be heading to the International Toy Fair to see all the new toys for 2011. I’ll also be meeting up with a bunch of fellow toy store owners to “talk shop”. Those informal gatherings are every bit as valuable as the trade show. I’ve learned more about running a retail business in those get togethers than I could ever learn in a book.

We are all in the same boat so we are all looking out for each other.

The students of the Jackson Retail Success Academy are forming bonds with each other, and already sharing their own ideas or thoughts on the class work and how it applies to each unique situation.

The shared experience of taking this class will make them look out for each other.

Too many times I see retailers miss out on these opportunities, these chances to hang out with other retailers, other people who share their concerns. Either they say they are too busy to meet with others, or they say that no one can fully relate to them and their problems.

Sometimes it is the person who can relate the least to your problems that can give you the clearest insight. Sometimes it is the simple task of setting aside time for these activities that you learn better organizational skills or set different priorities that will help you farther down the road. Sometimes it takes a little kick in the butt to get going.

Here’s your little kick in the butt. Go find a group of people who can share in your journey and help you grow while you help them. See if your chamber of commerce has a group, or your industry, or just go knocking on some neighbor retailers’ doors. You might be surprised to find there are many more like you out there thirsting for knowledge.

Most of all, don’t be a martyr. Don’t try to succeed at retail alone. Not only is it easier with friends, it’s a lot more fun!

-Phil

PS If you need something to kickstart the conversation, download one of my Free eBooks and get everyone’s opinions on the topic (and be sure to tell me what they thought).

Head Cheerleader

Five shopping days until Christmas. In the home stretch. You’re tired, run down and stressed, just counting the days. Your friends and family are encouraging you to “Hang in there, it’s almost over.”

Sorry to burst your bubble, but you need to do more than just hang in there.

Of the hundreds (thousands) of customers who come through your door this week, many are entering your store for the first time.

Now is the time to WOW them so they become lifelong customers.

So no matter how tired you and your staff are feeling, no matter how many hours you’ve worked, how many sleepless nights you’ve had fretting about the business, you have to find that reserve inside you that makes this week the most special experience your customers have ever had!

And you need to fire up the staff, too. Your new role for the next 5 days is Head Cheerleader. Here are three things you can do to keep your staff going strong until the end.

  • Praise them. Tell them specific things you have seen them do right in the last few days. Share their praise with everyone.
  • Cater lunch. Not just some sandwiches and chips but a real sit-down meal with silverware.
  • Hire a masseuse. Give the staff 20-minute breaks to get table massages.

These next few days are not only critical to your holiday sales, they are critical to your future because you never get a second chance to make a first impression. Get your store ready, get your staff ready and get busy!

You can do it. Rah rah rah, Sis boom bah!! I’m pulling for you!

-Phil

Don’t Panic

You’re at sea in the middle of a storm. Waves are pounding you from all sides. First from the right, then from the left, then two more from the right. You never know where the next wave will hit. You brace yourself for whatever impact will come and hold on tight.

The only way out of the storm is to keep a steady hand on the helm and keep the ship pointing in the same direction.

Okay, captain?

Economic Storm
We are in an economic storm right now. Ups and down without any predictable pattern. Customers spending more, customers cutting back. Positive and negative news from the media. Positive and negative signs at the register. Sales up big one moment, down big the next. promotions that work and promotions that fall flat.

Want an example from the weekend?

Black Friday I put out some doorbusters – really good sales on some of last year’s Step2 kitchens. Even had a $10 coupon from the company to sweeten the deal. Didn’t sell a single unit all day! Customer count was exactly the same as last year, but average ticket was down 8%.

Fast forward to Saturday – Small Business Saturday as promoted by American Express. 5% decrease in customers but 10% increase in average ticket. You might think the Amex promotion helped. Yet we had less American Express charges that day than a typical lazy Tuesday in August!

Stay the Course
Some businesses, after a weekend like that, will start twisting and turning every which way thinking that they need to chart a new course with every passing wave. But doing that will never get you out of the storm.

Keep a steady hand on the helm of your business. Adjust the sales as necessary, but always keep heading in the direction you have plotted for your success.

One thing we have learned in sixty years of retail. Smoother seas are always just beyond the storm. You just gotta stay on course.

-Phil

Rocked My Week!

It has been a fun week here and it just got better…

Not only are we just moments away from Black Friday – the real point when the Christmas shopping season begins… (no matter how hard some stores try to push the holidays)

Not only are we just hours away from my last day off for weeks… (I’ll only be at the store for a couple hours Thursday, I promise:)

Not only are we closing in on one of my favorite meals of the year… (it’s actually creamed turkey on Sunday at my mom’s house)

But I just got two bits of news that have rocked my week, so forgive me for doing a little tooting.

Entrepreneurial Vision
The Greater Jackson Chamber of Commerce just named me the 2010 Entrepreneurial Vision Award Winner for helping entrepreneurs and businesses in Jackson County.

Coolest thing about the award is it has nothing to do with what I do for the Toy House, but everything to do with how I share that knowledge with you.

Running the Jackson Retail Success Academy, working with the FasTrac start-up businesses, doing workshops for the Chamber, doing leadership and teamwork training for other local businesses, speaking at the Michigan Downtown Conference, writing this blog, publishing my book has all been a labor of love for me. Being recognized is just icing on that delicious cake.

More importantly, the award spotlights the importance of helping out other businesses, using the skills that have made us successful to help others reach their success. I just love that the Chamber has created such an award, and honored to be this year’s recipient. Cool!

Highlights for Hiring & Potter’s Wheel Book
The second thing to rock my week was an online interview I did for Business Info Guide. The book is getting rave reviews, but this interview will help me open it up to a whole new (bigger) audience.

If you haven’t read it yet, there are excerpts here on this blog. And if you are responsible for hiring and training, it is a book you definitely should read. Heck, at $19.99 it makes a great Christmas gift.

So I’m having a good week. How about you?

-Phil

Love is a Given

Tiger Woods was on ESPN radio this morning and mentioned a lesson his father, Earl, taught him.

Love is a given. Trust and Respect have to be earned.

That is true not only in people, but in businesses too.

You have customers who love you. We all do. Sometimes it is just the nature of our store. Heck, who doesn’t love a toy store? But have you earned your customer’s trust?

Earning Trust
You can earn their trust a number of ways…

By always doing what you say you will do. If you promise to call someone back with information, you better call them back with that info. If you promise delivery at a certain time, you better deliver at that time.

Sure you might slip up along the way. We all do. but if you can’t do what you said, you better be upfront and honest with why you didn’t perform. When you make a mistake, admit it quickly and apologize profusely.

By always being consistent in who you are. If you stand for quality, you have to drop the products that don’t meet your standards and stand behind the products you do sell. Whatever your principles, you have to show that you are willing to give up some of your profit to be consistent with your values.

By always looking at your business from a “what’s-in-the-best-interest-of-the-customer” point of view. Is your cash wrap set up for quick and easy checkout? Does your return policy favor you or the customer? Are you willing to do what is right by the customer even when it costs you money?

Earning Respect
To earn respect you have to be respectful. Do you always have a positive outlook or are you a skeptic who sits back and take potshots at everything? Do you join in on the solution or just talk about the problems? Do you help out others or only look after yourself?

Your attitude goes a long way towards your ability to earn your customers’ respect.

We all have customers who love us. But if you want to grow your business, you have to earn their trust and respect. And you have to earn it anew every single day.

-Phil

Why You Should Care

Saturday, November 13th is Neighborhood Toy Store Day – a day to celebrate the wonders and delight of your neighborhood independent toy stores.

The genesis for this day comes from the American Specialty Toy Retailing Association (ASTRA).

Yes, it is a contrived celebration, not unlike the Hallmark holidays like Bosses Day and Sweetest Day. Yes, it is a marketing ploy designed to get shoppers into these local toy stores ahead of the Black Friday fiascoes. And yes, it is a lot of work for these toy retailers to plan activities, run promotions, and market themselves.

There are pretty much three responses from toy store owners on events like this:

  1. Some are going to ignore it and decide it isn’t worth the effort. They figure it won’t move the needle much and won’t be around for long so they won’t get sucked into the hype.
  2. Some are going to go half-ass and do just enough to say, “Yeah, I did something, but it didn’t work out for me.”
  3. Some are going to embrace it fully, plan wonderful events, inspire their staff to get excited about it, inspire their customers with their own creativity, and make this one of the most special days of the year.

Which of the three do you think will reap the most benefits?

The big difference is PASSION. When you show passion in your business, those around you cannot help but be sucked in by it. Your staff will mirror it. Your customers will embrace it. And your sales will show it.

So embrace those moments where you can let your passion for business shine through. If your industry creates a special holiday, put some passion into celebrating it. Your customers will notice and react accordingly.

-Phil

PS We are celebrating in style on the 13th with one of the biggest Playmobil Play Days we’ve ever had! The staff is excited. The buzz is building. Yeah, it’s going to be an awesome day!

Christmas Sales Predictions

It’s time to make your predictions. What do you see in your crystal ball for Christmas sales?

Shopper-Trak is predicting a 2.9% increase.
National Retail Federation says it will go up 2.3%.

But what does that mean?

Not every retailer is going to hit that 2.3 to 2.9% mark. In fact, I predict that very few retailers will be up 2-3%.

Double-Digit Growth
Some retailers are going to have double-digit growth this holiday. Others are going to see double-digit declines. And a whole bunch of retailers are going to be within 1% either way of last year’s sales.

Those numbers NRF and Shopper-Trak are predicting are national totals. They take into account overall population growth, spending habits, surveys of customer moods, etc. – on a national basis!

None of that has any relevance in your local market. Your population might be growing faster than the national average. It might be declining. Your competition might be doing more in your market (or less). You might be doing more (or less) to grow your own business.

The Only Number That Counts
The best thing to do about those numbers is to forget them. Ignore them. Don’t give them the time of day. Focus only on your own number, the growth you want to make happen in your business. Pick a number that works for you. Then set about doing what you have to do to hit that number.

For me, I am predicting 15% growth in November. I have acted accordingly. I have planned my marketing and my inventory to meet this goal. I have indoctrinated my staff that this is what we are going to accomplish. I have trained them, scheduled them, and inspired them to make this happen.

Planning and Action Make it Happen
It isn’t a wish. It is a plan. We looked at what we did last year. We looked at what we are capable of doing historically. We looked at what was realistic based on this year’s trends. We looked at what the market would bear. We chose a goal that we knew we could make. Then we set up actions to put us in the right position to meet this goal.

It doesn’t matter what NRF or Shopper-Trak believes. It only matters what you believe. Do you believe you can reach double-digit growth this holiday? If you believe it, you can achieve it. You only have to act upon those beliefs.

If you’re just sitting back waiting for your 2.3% increase, I promise you, you won’t get it. Be proactive and go get the sales you want for your business.

-Phil

Would You Attend This Workshop?

The Jackson Retail Success Academy is now signing up retailers for our 2011 class that starts in January. This 8-week program has been a huge help for new retailers to get the foundation they need to be successful.

Some have asked if we could run this academy in their community so I put together a 2-Day Workshop format.

Would you sign up for this workshop if it was offered in your town?

Retail Success Academy 2-Day Format

Day 1:
8:00am Meet & Greet – goal setting, expectations
8:30am Understanding Your Brand – definition of branding, character diamond workshop

9:30am (break)

10:00am Character Diamonds Revealed
10:45am Traditional Advertising – Creating an ad budget, How Ads Work, Advertising ROI, Ads with Impact

12:00pm (lunch)

1:00pm Marketing on a Shoestring Budget – Word of Mouth, Social Media, Cause Marketing, Networking, Public Relations

2:30pm (break)

3:00pm Understanding Your Financials – Balance Sheets, Income Statements, Ratios & other important numbers
4:00pm Cash Flow Sheet

5:00pm (break for evening)

6:00pm Dinner/Drinks someplace fun in your town

Day 2:
8:00am Resources Breakfast – meet the local Chamber, DDA, Buy Local groups
8:45am Inventory Management – GMROI, Pricing for Profit, Turn Ratios, Open-to-Buy, Cash Flow

10:45am (break)

11:00am Customer Service – The Basics, The Best Practices, The Wow! Service

12:00pm (lunch)

1:00pm Hiring & Training – Identifying the Perfect Employee, interview questions that work, developing a training program

2:15pm (break)

2:30pm Staff Meetings/Training Sessions – hands-on workshop to learn how to plan and run successful meetings & training sessions
4:15pm Final Q&A
4:45pm Evaluations

5:00pm Go be successful!!

Tell me whether you think it would be worth two days to you to attend a business-altering event like this and how much you would expect to pay. (You’ll be surprised when I reveal what it would actually cost.)

-Phil

PS All those links take you to free eBooks I’ve already written on those topics. The eBooks are extremely helpful but not nearly as much fun and motivating as the live presentation.