It’s Resolution Time

December 4, 2014  by in Business Strategy, Industry   

By: Bob George

The appointment with your certified public accountant is still several months away. Your friendly banker’s annual meeting is also in the future. Therefore, your business resolutions are a matter for you and your personal business goals and objectives.

The month of December is probably budget time. More than likely, working from your financials, the chart of accounts has been transferred to a spreadsheet with your controller applying his or her best judgment for the expense items. The critical decisions regarding salary increases and topline (revenue) increases have been left for your final input. The forecast contained in later pages of this Home Furnishings Business issue may provide some guidance. Most likely the resulting bottom line will be quite similar to what you achieved last year.

Why?

Because you want a realistic budget. That’s why.

Now, finally, we get to those resolutions. Spreadsheets are wonderful tools that allow you to play the “what if” game. Increasing revenue by 15 percent; improving gross margin by two points; reducing sales expense by two points; reducing warehousing/delivery by two points; reducing general and administrative by two points – all of these actions will cause a significant change in your bottom line.

 The question becomes, “How do I make these actions more than the manipulation of a spreadsheet?” The answer requires the resolve to change not the numbers, but the people, process, merchandise, and retail experience. What gives you the resolve to make these resolutions and then stick to them? First, you must know that they are achievable when compared to industry standards of good performance. You may then reinforce this by participating in a dialogue with a peer group. This group’s past experiences often can guide you in evaluating your current situation. Next, establish metrics that you monitor weekly, monthly, and quarterly. Understanding the impact of each metric is essential.

What causes the metric to change? It is simple, but you must change the metrics. The starting point is a resolution followed by hours of execution. I hope you find inspiration and input from the pages of Home Furnishings Business.

Contact us if you need encouragement.