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Newly Redesigned PhilsForum.com Website

I told you I was working on a new version of my PhilsForum.com website.

It just went live a few minutes ago.

Everything is up and running except this blog (which should be migrated over by late Thursday).

In an effort to make it more search engine friendly, some of the pages you’re used to seeing have new names.

  • Freebies is now Free Resources and still includes links to free pdf’s you can download on a variety of topics
  • Speaker for Hire is now Hire Me to Speak and focuses on the top programs I am most often hired to do
  • Products is now Phil’s Books and focuses on my two books, Hiring and the Potter’s Wheel and Welcome to the Club Daddy
  • Media is now About Phil and yes, it is about me

You’ll also find a few fun things hidden here and there on the site including a page of radio ads I have run for Toy House and Baby Too.

Check it out and let me know if there are any issues with the site (tell me what browser/platform/device you’re using, please).

Every time an independent retailer grows, we all grow.

-Phil Wrzesinski

PS Supposedly all email subscribers will be migrated over, but I will be looking into it directly. You may get an email from me asking you to resubscribe to the new blog site. Just giving you a heads up.

Launching a New Website – The Jackson Retail Success Academy

Back in February 2008, the newly hired director of The Enterprise Group, Scott Fleming, invited all the alphabet groups in town to a meeting to discuss how we were supporting existing retailers in Jackson.

The DDA, SCMW, SBTDC, JLF, EDC, JCCC and MA were all there. I was there. Everyone but Scott himself who got called away at the last minute.

The question of the day was, “What is your agency doing to help indie retailers survive and stay in business?”

After seven people said, “Absolutely nothing,” an idea was born – the Jackson Retail Success Academy (JRSA). Less than two months later we launched our first series of classes.

I was the only retailer sitting at that table that morning, so I was asked to come up with a curriculum (a healthy dose of customer service, marketing & advertising, inventory management, financials, and hiring & training). Ten businesses signed up for that inaugural class.

Over the next several years, we tweaked the class schedule to make it work better for the attendees. We had start-ups attend. We had new owners taking over old businesses attend. We had non-retail businesses who wanted the customer service, marketing and hiring segments attend. We had business coaches who wanted to learn new techniques for teaching attend. We had restaurants, online retailers, and home-based retailers attend.

The cool thing is that JRSA is still around and still getting better. The class schedule is shorter (from an original 10-week program down to 5 weeks now), but the content is better, tighter, and more focused.

A retailer who takes this class will have amazing tools they can use to fix almost any kind of retail problem.

Finally, a website with all the details is up.


Just like the class, the site is constantly being tweaked and will continue to get better. The retailers in Jackson ready to take their businesses to the next level are already checking it out and signing up for the next class starting in January.

What are you doing to grow your business?

-Phil Wrzesinski

PS If driving to Jackson five times is out of the question, but you still want to grow, I have a Road Show version of JRSA I can bring to your town. You only need to convince five businesses to sign up and find a place to hold the classes and I’ll do all the rest.

Putting Amazon and eCommerce Into Perspective

It is about that time of year when you start hearing all the news about Amazon and Wal-Mart and low prices and discounts and the death of mom & pop shop retailers.

Yeah, Amazon is huge. In 2013, they did $75.4 billion in sales. That was 28.6% of all US eCommerce!

But it was only 2.5% of all retail. In fact, if you take gasoline and groceries out of the mix, eCommerce only accounted for 8.8% of all retail dollars last year.  (see references below)

Think about that for a moment. All the hype about Amazon and the Internet, yet over 9 out of every 10 dollars spent in retail were spent in a brick & mortar store. Brick & mortar is so far from dead, that any report you hear otherwise should be discounted immediately.

Yeah, Wal-Mart is huge, too. Almost four times bigger than Amazon. In 2013, they did $279 billion in sales in the US. That was 9.2% of all retail – more than all of eCommerce!

But once again, that shows you there is still plenty of room for you to do business. Add up Wal-Mart and all of eCommerce and you still have 82% of the retail dollars going somewhere else. That’s almost $2.5 trillion dollars going somewhere else.

That somewhere else ought to be you and me. If we quit worrying so much about Amazon and Wal-Mart and the demise of the mom & pops and start focusing on making ourselves better, it will.

-Phil Wrzesinski

PS I used two sources for the numbers you see above. The first source here from emarketer.com claims that all retail was $4.5 trillion. But I felt that number was inflated by things like gasoline purchases and other non-eCommerce retail, so I also used the numbers from the US Census here to get a true product purchase number just over $3 trillion.

PPS And the number from Amazon is their total sales, not just US sales, so their percentage of the US market may be a little bit lower.

How Much Cash is Enough?

(Warning: This post includes math. If you wish to stick your head in the sand and stay away from all things math, do so now.)

This is a big question at the end of the year for pretty much all retailers, especially us seasonal retailers. We’re flush with cash from the big Christmas season. We’re thinking we want to give ourselves a nice bonus, possibly pay down a loan, or even bonus the employees who worked so hard.

We just want to make sure we have enough cash for the upcoming year. But how much cash is enough?

You need to calculate two numbers – Current Ratio and Cash-to-Current Liabilities Ratio.

To do that, you need a Balance Sheet from January 1st. Your accounting software can easily print that for you. (If you don’t have any accounting software, take some of that cash and invest in Quickbooks and a class on how to use Quickbooks – it will pay for itself in one year!)

On your Balance Sheet locate these three numbers.

  • Current Assets
  • Cash
  • Current Liabilities

The Current Ratio is calculated like this:

Current Assets divided by Current Liabilities = Current Ratio

The answer will typically be shown as a number like 2.9. A good rule of thumb is to have a ratio of 1.5 or higher. Typically seasonal businesses at the end of their season will have a ratio around 3.0 or higher. If your number is around 3.0, that’s pretty good.

The Cash-to-Current Liabilities Ratio is calculated like this:

Cash divided by Current Liabilities = Cash-to-Current Liabilities Ratio

The answer will typically be shown as a percentage like 75%. For some businesses you would ideally like between 10-20%. But for seasonal businesses entering their slower season, you will want much more, as much as 70-80%. If you are a seasonal fourth quarter business, 75% is a good number to have right now.

Separately, the two numbers only tell part of the story. The key is to look at both together. If both numbers look good, then your only real worry is deciding what to do with the extra cash. If both numbers are weak, then you have some tough decisions to make to try to raise some cash and get cash flow under control.

But when one is weak and the other strong, there are a number of issues at play.

If the Current Ratio is strong but the Cash-to-Current Liabilities is weak, then you likely have too much inventory. That may be on purpose because you got a good buy or are planning an expansion or are growing inventory for the upcoming season. Or it may be that you bought too much last year and are carrying excess inventory. It might be time to have a sale.

If your Current Ratio is weak but Cash-to-Current Liabilities is strong, you need to start writing orders and building up your inventory.

The math isn’t that hard to do. The results, however, tell you a lot about the health of your business. Don’t ever be afraid of the Math.

-Phil Wrzesinski

PS If you are a summer seasonal business go pull your Balance Sheet from the end of your season and do those calculations from there. If you are not a seasonal business (doing 40% or more of your annual business in one quarter), then you don’t need the big build-up of cash so those numbers can be much lower. Just keep an eye on them each month.

Give Your Business a Physical – Track These Numbers, Too

There are many different metrics you need to measure to determine the health of your business. Two of the biggest are Profits and Cash Flow. If both of those are good, your business is probably doing well.

But that doesn’t mean you don’t look at other numbers, too. That would be the equivalent of a doctor checking your temp and blood pressure and determining you are completely healthy without looking at anything else.

Here are some other numbers you should track to keep a check on the pulse of your business.

Traffic – Number of transactions you had this year compared to last year. Did that number go up or down? If it went down, why? 
  • Did your location get worse? 
  • Was there a change in the types and numbers of stores around you? 
  • Was there a drop in population? 
  • Did you cut back your offerings and categories significantly?
If your traffic was down, but none of these other factors were negative, you have a hole in your Customer Service (repeat and referral business) and/or Advertising (first-timer business). You need to find that leak and fix it fast.

Average Transaction – Take your total sales and divide by # of transactions. Compare to last year. If this number went down, why? 
  • Did you carry fewer high-ticket items? 
  • Did you add more low-ticket impulse items that people might run in and grab? 
  • Did you do anything to attract more youth? 
If none of those factors were in play but your average ticket went down, you have a hole in your staff’s ability to sell. You need to fix that fast.

Market Share – This is a little harder to calculate, but an incredibly valuable piece of information that can pinpoint problems – even if you had a great year on paper!
  1. Find the national sales figure for your industry. 
  2. Divide that by the population of the United States to determine sales per person. 
  3. Multiply that times the population of your trade area to determine the market potential for your area.
  4. Divide your total sales by that market potential to find your percentage or share of the market.
  5. Compare it to last year’s number.
You can have an awesome year with solid sales growth and decent profits and cash flow, but still be in potential trouble if your market share is slipping. If all your growth was fueled by huge growth in your market, but you aren’t holding onto your share of that market, then you are ripe for being picked off by a better competitor entering your market. You need to figure out why your share is decreasing and fix that problem now.

You can also have a lousy year with declining sales and profits, but mostly fueled by a change in the market. Maybe your industry is in decline (smaller sales per person). Maybe your trade area is shrinking. But if your market share is growing, then your big issue is determining whether to cut expenses and inventory and hope the market comes back or move to a new market.

Make sure your Profit and Cash Flow are good. Those are immediate life threatening problems for your business. If those are good, it buys you time to check/fix the other problems.

Give your business a full physical. An ounce of prevention is worth a pound of cure.

-Phil Wrzesinski
PS Be honest in your evaluations. Even if there are circumstances beyond your control, there are always circumstances you can control and improve while you ride out the storm.

Retail Math is Not So Scary

No one signed up for my June Business Boot Camp on Retail Math. (Well, okay, a couple people did, but not enough for the Chamber to make it a go.)

I think I know why.

Retail Math is scary. So many numbers and ratios and calculations. So much confusion over terminology. Is a credit a good thing, or is that a debit? (I still get those confused all the time.) Accountants and bankers don’t seem to help. They use words like equity and depreciation and accrued this or that.

We don’t like feeling dumb, so we don’t like going to classes and workshops and seminars where we know next to nothing. Yet that is exactly the kind of classes and workshops and seminars we need to be attending. Especially Retail Math.

If you want to be successful and pay yourself what you’re worth, you have to know the math.

Fortunately for you, I have struggled with this myself. So I attended the workshops and seminars, talked to the accountants, spent the time wrapping my head around all those 50-cent words and million dollar concepts, trying to find a way to put them into terms you and I and all the other indie retailers might understand.

I wrote them down in two simple, powerful Freebies

Both contain math. It is math you can do.
Both contain terminology. Explained in a way that will make sense to you.
Both contain ideas and thoughts on how you can use the math.

Retail Math is not so scary once you learn it.

Maybe I cannot lead you to a seminar or workshop, but I can lead you to this water. All you have to do is drink.

-Phil Wrzesinski

PS For my toy store friends, I took the Financial Statements eBook a step farther. ASTRA contracted with me to write a definitive book on the Financials of an independent toy store called Financials You Can Understand (they wanted to call it Financials Made Easy, but even I knew that was stretching it a bit). The book is a combination of all the math in the two Freebies above along with an explanation of what a typical toy store’s numbers would be and what to do if your numbers don’t match. It isn’t free, but the information is so valuable that you will quickly recover the costs of the book many times over – even if you aren’t a toy retailer. My research has found that the numbers of a typical toy store are quite similar to any retail business that does most of its sales in the fourth quarter.

PPS Full disclosure: I do not get anything from the sales of that book. They already paid me to write it. You, however, will get plenty from it. The only thing scary is how much better you will understand the numbers in your business.

How Much Are You Investing in Your Business?

The Jackson County Chamber and I are teaming up to offer the best segments from the Jackson Retail Success Academy for all Jackson area businesses (and anyone willing to make the drive).

Three classes. Three four-hour days. $250 investment in your business (or $99 per class if you cannot make all three or are not a retailer.)

Inventory Management and Financial Health for Retailers
Thursday, June 27 (9am to 1pm) 

Every retailer knows that Cash is King. But do you know how to get more cash in your business to grow your kingdom?

This Business Boot Camp is designed strictly to help retailers understand how to manage inventory and expenses and, most importantly, your cash. You will learn simple formulas that the smart retailers use to keep the checkbook fat and happy. You will learn the Do’s and Don’t’s for keeping your inventory fresh and moving. You will find out where your cash is hiding and how to get more of it.

We will discuss things like Open-To-Buy programs, financial statements, the proper numbers to measure, how to price your products for profit, and the simplest way to get the most out of the inventory you sell.

Yes, there will be math. The important math. The kind of math you have to do if you want to be successful. What will surprise you is how quickly and easily you will learn the math and see the results.

(Note: to get the most out of this Business Boot Camp bring your previous fiscal year’s Balance Sheet and Profit & Loss statement. You will not be asked to share, but it will help you do your own math.)

Shareworthy Customer Service for Small Businesses
Thursday, July 11 (9am to 1pm)

We all know Word-of-Mouth is the best form of advertising. But do you know how to get people to talk about your company?

This Business Boot Camp will teach you the fundamentals behind generating Word-of-Mouth from your customer base. You will learn how to exceed customer expectations in such a way that they have to tell someone else. You will learn how to create a culture in your business that wants to delight your customers at every turn and raise the bar of Customer Service so high that you turn clients into evangelists.

Whether you are a retailer, a service provider, or any type of business, you will walk away with four ways to generate word-of-mouth, a new approach to hiring and training, at least one planned staff training, and a better understanding of what it takes to offer Customer Service that makes people want to talk.

Word-of-Mouth is still the most powerful form of advertising. This Business Boot Camp will be one you will be talking about for a long time.

Branding and Advertising: Reaching New Customers in Today’s Market
Thursday, August 8 (9am to 1pm)

The advertising that got you results yesterday isn’t working today. Today’s market just can’t be reached. Or can it?

This Business Boot Camp will teach you the fundamentals of marketing that work in any day and age and how to apply those to this day and age. You will learn what moves the needle in advertising and how to craft a message that gets your potential clients to take action. You will learn the biggest myths of advertising and how even the largest companies throw good money away every single day. You will learn how to get the most out of your advertising budget (even if it close to zero).

Advertising cannot fix your business, but if you have a good business model, you will learn techniques that will grow your business the right way and keep it growing for years, no matter what kind of business you run.

Contact the Jackson County Chamber of Commerce to sign up. It will be the best twelve hours you spend on your business this summer!

Phil Wrzesinski

PS If you are struggling in any one of these areas, you should sign up for that one class Ninety-nine dollars for four hours of top-level, hands-on instruction is the kind of no-brainer investment you know you should make for your business.

PPS If you don’t think you need any of these classes then you should definitely sign up for all three. Last night as I did a presentation for the Quincy Chamber of Commerce, one of the organizers lamented that it was only the businesses who were already doing well that showed up. I reminded her that was why they were doing well. They kept showing up.

I’m Gonna Raise Your Sales 300%!

I was at a conference where one of the speakers promised us he could raise our sales 300%!

Yeah, like me, you’re all laughing at him.  Huckster, Snake Oil Salesman, Liar Liar Pants on Fire and other derogatory terms crossed your mind.  But after further review, I think his plan was solid and would probably work.  Short term.

His plan was simple.*  Slash your prices by 50%.  Increase your advertising by 400%.  In short time your sales will be 300% greater than the same period last year.  You’ll be broke and filing bankruptcy, he was quick to note, but you’ll be happy because sales are up!

And therein lies the problem…

Ask any retailer, “How’s biz?” and they’ll either be happy because sales are up or sad because sales are down.  Folks, we’re tying our mood to the wrong numbers.  It isn’t about Sales.  It is about Profits.  Sure, increased sales make it easier to be profitable.  But they don’t guarantee it.

I’m still waiting on the savvy retailer, who when asked, “How’s biz?” tells me, “Awesome! I was able to cut three points off my COGS and finally got a handle on expenses.  Profit this year is well ahead of last year.”

Then again, I think most retailers are not even calculating such numbers.  They are just waiting until the year end when the accountant tells them if they made any money or not.

I get that.  Retail accounting can be scary.  Even though I’ve written a book on the complete financial analysis of the typical toy store and have also written an easy guide to reading your financial statements (those reports Quickbooks and all other accounting software can print with just a couple clicks), I’m still constantly trying to wrap my head around our financials.

But that is far better than putting my head in the sand and ignoring those numbers.  Especially now with the 4th quarter finally under way.

Now is the time to figure out a new pricing structure that might increase your gross profit.
Now is the time to figure out which expenses are out of whack and need attention.
Now is the time to figure out what inventory isn’t moving and needs to be marked down.
Now is the time to figure out where are the holes in your training program.

-Phil Wrzesinski

*PS  Don’t try his plan.  Please don’t try his plan.  Even he didn’t want anyone to try his plan.  He was just trying to make a point (and I was, too).  If you try anything, try measuring your financials once a month.  Yeah, it’s more work on your part.  Yeah, it’s way more rewarding when you do that work right!  Waaayyy more rewarding.

When it Rains…

Yesterday afternoon I watched my son run a cross country race in the rain.  Some of the hundreds of spectators had umbrellas, some had raincoats, some had no protection at all.  I read the weather reports.  I had an umbrella and a raincoat.

After the race that same son had to rush to the football stadium to march with the band.  The band wore full length rain jackets with hoods.  It rained so much the woodwinds didn’t even play.  I added rain pants, a warmer shirt and a hat to my umbrella and rain coat.  Some people in the stands had nothing more than a jacket without a hood.

This morning my other son had a soccer game.  He was the only kid on the soccer field wearing a rain coat.

Sometimes it rains.  Life still goes on.  The cross country team runs. The football players play.  The band marches.  The soccer game happens.

Some people are prepared for the rain.  They read the weather report and dress appropriately.

Some people don’t.  They hope the game or meet is canceled.  They pray the weather will change.  They make do the best they can and pretend it doesn’t bother them.

Are you reading the weather report for your business?  Are you prepared for the storms?  Or are you just praying and pretending?

-Phil Wrzesinski

PS Storms can be economic crises in your hometown, vendor issues, competition coming to town, over-buying, or even under-buying, cash-flow problems, profit problems.  Every business has storms.  The best businesses have umbrellas and rain coats ready to handle those storms.  One way to stay prepared is to make a list of storms you might have to face and find the appropriate “umbrella” for each one.

In the Shark Tank

I was watching my new favorite Reality TV Show last night – The Shark Tank.

Entrepreneurs with dreams go before five filthy rich people like NBA Dallas Mavericks owner Mark Cuban and QVC celebrity inventor Lori Greiner to make a pitch for money to help them launch a new product or service.  The Sharks then tear into the entrepreneur asking pointed questions to see if the idea really can make them money.

If the idea is good the sharks make offers.  If the idea is bad, the entrepreneur walks away empty handed.

I watched two episodes last night and then couldn’t get the show out of my mind.  I dreamt all night that I was standing before them asking for money and they were grilling me with tough questions about the viability of my store, the reasons why I thought we were successful, what we were currently doing to achieve our goals, and what I thought we needed to improve.  The big question, of course, was what would I do with the money I was asking for, and how much of the company would I give up to get that money?

Man, was my subconscious telling me something last night or what?

Fortunately, my over-sized ego and tireless efforts to understand my business better were more than up to the dream-based challenge.  I stared down the sharks, answered all their questions, and had them fighting over who was going to help me.  The best thing was I woke up refreshed with some new clarity to what I really needed to do to accomplish my goals.

You might not be so lucky as to have such an active, imaginative subconscious.  That’s okay.  Here is an exercise that you can do in broad daylight.

First, watch an episode or two.  (Be careful, though, or you might get hooked like me.)

Then, pretend you are going on the show to ask for money.

  • How much would you need? (write it down)
  • How much of a stake in your company would you give up for that money?  
  • What would you do with the money?  
  • What makes you confident you would get a good return on that investment for your new partner?
  • How will you answer the criticism for your past record?
  • What haven’t you thought of yet? (I know, that’s a toughie, but watch a few episodes and you’ll think of new questions.)

Those questions might not be easy to answer.  But if you want to swim with the sharks, you have to be prepared.

-Phil Wrzesinski

PS  The best part of the dream was when I handed them each a copy of my book, Hiring and the Potter’s Wheel: Turning Your Staff Into a Work of Art and Mark Cuban nodded his head in approval.