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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.

Financials You Can Understand

I told you about the book I wrote for the American Specialty Toy Retailing Association called Financials You Can Understand: Building Blocks for Successful Toy Stores.

The book is finished, published and available for purchase.

Here is what the editors wrote about the book…

“After reading this book you will know and understand all of the numbers in your Balance Sheet and Profit and Loss Statement – from where they came, what they mean and how you can make them stronger. You will know what other numbers you should be tracking and how they compare to other specialty toy stores. If you understand the basics, look for special boxes with advanced, in-depth knowledge on more detailed ways to track your numbers. Most importantly, you will know how to make your business better.”

Who should buy this book?

Anyone who owns a retail store and (or) feels clueless when the accountant starts talking about your financial statements will find this book amazingly helpful.

Although much of the discussion is designed around the toy industry, the information, insights, and analysis will translate well to any type of retailer.  If you struggle to understand your accountant when he talks to you, or struggle to wrap your head around all the numbers on your financial statements, this book will be like taking the coolest, easiest, most practical accounting class ever that makes it all something you can understand.

You can buy the book here.

-Phil Wrzesinski

PS  You can still download my Financials eBook for free.  It does not have the detail or analysis that this new book does.  But it does cover some basic stuff.

PPS  Yes, the book might seem expensive at first glance, until you see the value in it.  Even a small retailer will gain enough knowledge to recoup that investment in short order.

PPPS  Full disclosure.  I do not gain financially from the sale of this book.  I have received my compensation for writing it.  But like with everything I do, there is no satisfaction for me until you benefit from my efforts. Please buy a copy for yourself or as a gift to a fellow retailer who could benefit.

Monthly Chores

Today I…

  • Balanced the store’s checkbook
  • Ran Sales Reports by department
  • Measured GMROI by department
  • Ran current Balance Sheet
  • Ran Profit & Loss for the month and year-to-date
  • Sat down with my buyers to make sure we were on track
  • Monitored Cash Flow*

I’m not bragging.  I’m not even saying I liked doing any of those things.

I am more Big Picture than I am Data & Details.  But it takes Data & Details to draw the Big Picture.  So I spend a few hours on the first of each month drawing the Big Picture with all of that Data & Detail.

Keeps the Big Picture clear in my head.

You, too?

-Phil Wrzesinski

*I actually do this daily, not monthly.

PS  The hyperlinks above take you to a couple really cool documents that help you understand those calculations.  Most people won’t bother to click on those links.  But then again, you are not most people.

New eBook – Reading Your Financial Statements

I promised I would let you know when I updated my eBook on how to read and understand your financial statements.

It is updated.

Just click the link to download your FREE copy of Reading your Financial Statements.

You’ve most likely just finished wrapping up your year-end.  This will help you decipher those reports the accountant prepares and help you figure out how to use them to make your business more profitable.

Like always, if you have any questions, please ask.

-Phil Wrzesinski

PS  This is a much, much simpler version of the book I wrote for the American Specialty Toy Retailing Association.  That book – Financials Made Understandable – includes more detail, discussion, and advanced dialogue on the Balance Sheet and Profit & Loss including how to determine why your numbers might not look like other toy stores.  The book will be out this June and even if you are not a toy retailer, you will find answers to your questions that your accountant might not fully understand because it is written by a retailer like you.  Contact the ASTRA office to pre-order.

Do it Until it is Easy

I have always been pretty good at understanding Advertising. The stuff I have learned from Roy H. Williams, aka The Wizard of Ads, just makes total sense to me.

I have always had a knack for teaching and training the staff. Once I created my own system for hiring, I’ve been sought out as a guru for Hiring and Training seminars.

I have always been pretty good at understanding how to better manage your Inventory. My seminars on this topic have been some of the highest rated talks I have given.

My Achilles heel has been the Financials. Oh, I know ’em. Have to when you run a business like mine. But knowing them and understanding them has been two different things.

Until last night…

I gave my first ever presentation on Understanding the Financials of a Retail Business to a group of business owners. Like me, they all considered their grasp of the accounting side of business to be their weakest. But in less than 90 minutes they all understood how to read a Balance Sheet and Profit & Loss Statement . More importantly, they figured out how to use both of those reports to budget, manage cash flow and inventory, and make mid-year corrections.

How did I do it? How did I take something difficult and make it understandable? The same way a professional golfer masters a new shot. I worked at it. For me that meant writing a book about it.

Last fall the American Specialty Toy Retailing Association asked if I would write a book to help other toy retailers understand their financials. I said, “Yes!” and got busy figuring out how to do it. The book will be ready by June and can be purchased from ASTRA.

More importantly, however, the process taught me that I can take something hard and make it easy. I just have to work at it. Better yet, last night the business owners in the room unanimously agreed that I had accomplished my goal – to help them understand their financials, too. That made the work all the more worthwhile.

You can do it, too. Just keep doing the hard stuff until it becomes easy. Surprisingly, for most of us that learning curve is pretty quick. Getting started is the only real challenge.

-Phil Wrzesinski

PS I am currently reworking my eBook on this topic and hope to publish the new one soon. It is an overly simplified version of the ASTRA book. I’ll let you know here when I get it done. If you want more details, advanced ideas, and a comparison to toy industry averages, you will want to purchase the book. Check with the ASTRA office. I think they are taking pre-orders now.

Gotta Keep Learning and Growing

I have not been blogging as much as usual. Sorry about that. You would think that with the hectic Christmas season behind me I would have more time.


I have been busier than ever.

One of those projects that has kept me busy is that I was asked by the American Specialty Toy Retailing Association (ASTRA) to write a book about the financials of a toy store. A comprehensive guide to help independent toy stores understand their financial statements, how those numbers get calculated, what are the industry averages, and how to figure out why your numbers might be higher or lower than your fellow store owners.

Yeah, they asked me to write a book on financials. The same guy who says right on the home page of my website that I am not a financial guru.

So for the past few weeks I have been doing my homework to become that financial guru. Okay, maybe not guru, but learning enough so that I can help you understand your numbers, too. And the journey has been worth it.

For the first time, when my accountant came in to help us make those year-end adjustments so all our accounting lines up, I finally understood everything he said. A couple of times I even knew before he said it what he was going to say.

Don’t get me wrong. I am not going to pass any accounting exams in the near future. But the thrill of knowing I had learned something useful has given me a new excitement towards the business and a refreshed energy.

Maybe you could learn something new to give you that same feeling of newfound enthusiasm. If so, I have a list of topics worth exploring right here.

-Phil Wrzesinski

PS Last year I posted a free eBook on Reading Your Financial Statements. It is pretty good. Not as good as the book ASTRA will be publishing this spring, but a decent start. I will be correcting a couple errors in it soon, but even this version might be a big help for those of you struggling to speak accountantese.