No-one else is going to care about your business as much as you do

Do you set a forecast budget for your business each financial year?

Over the years, I've had many business owners look at me blankly when I ask this, so perhaps I should explain what I mean by it.

A forecast budget is a record of all expected financial activity within a business over a set period, usually a year. Broken down by month, it's an invaluable tool for the management of cash flow and monitoring of business health.

What sort of information goes into a forecast budget? Everything. From sales to staff costs, heat and light to bags and wrapping, subscriptions to shrinkage, and everything in between. If it enters or leaves the business, include it. Although putting together the first one can be challenging, getting it right makes the construction of subsequent forecast budgets much quicker and easier. 

I created my first forecast budget in 1990, and it took me three days to put together. By the time I made sure I had covered everything and phased it correctly, I was going a little stir crazy, but I also had a document which gave an accurate plan of what was expected to come into the business and what was going to leave it - and when. Keep in mind that this was pre-computers, so everything was done manually. Everything! Today, that same budget could be put together in a fraction of the time.

There are a few things to consider when planning you first forecast budget:

• Phasing  There's no point spreading the cost of insurance evenly across the year if it's charged quarterly, for example. Allocate the cost to the period you expect it;
• Be realistic Overestimate your sales, for example, and you may allocate unsustainable expenditure. Underestimate and you may not allow sufficient expenditure. It's rare to be 100% accurate, but you can be realistic based on historical information and current trends;
• Watch your weeks  Financially speaking, some months have four weeks, whilst others have five. This becomes critical when factoring in income or costs which occur on a weekly basis, such as staff costs;
• GST  Either include it, or don't. But don't include it on some lines and not others; that way madness lies. Ideally, don't include it.

At this stage you might be wondering if it's worth all the bother. After all, that's what accountants are for. Rest assured, it will be one of the most valuable tools you'll create:

• It will give you a much better understanding - and control - of your business;
• You will be able to pick up on discrepancies or cost blowouts quickly, allowing you to address them in a timely manner;
• You can respond to changes in circumstance in a timely manner;
• You know what invoices are coming through and when, and can manage your cash flow accordingly - there should be no nasty surprises.

The point about picking up on discrepancies is particularly pertinent. I've worked with many businesses which received only one detailed assessment each year, usually several months after the end of the financial year, invariably done for tax purposes. This may be completely adequate, if adequate is enough to drive your business. However, in too many instances these assessments showed a business deep in debt. In some cases, a plan could be implemented to help the business recover. Unfortunately, in others the problem had compounded to such an extent that recovery was next to impossible. Frustratingly, too often these businesses could have prevented the situation from becoming serious by picking up on it more quickly. So often, it's easy to fix an issue and prevent it from recurring in the early stages.

If this sounds rather bleak, it's only partially intentional. The reality is that a successful business doesn't just happen, someone takes control of it and makes sure it's running smoothly and to plan. The financial health of your business is in your hands, but it doesn't just happen, it requires planning and effort.

Which brings me back to the title of this post: no-one else is going to care about your business as much as you do. If you're not monitoring its financial health and responding to what you find in a timely manner, no-one else is going to do it for you. 

Nice is good, but reliable is better

I'm over retailers who think that being nice is enough to keep them in business. There, I've said it.

Being in any type of service industry is hard work. There are numerous touch-points with customers where you will be judged, and if you're not prepared to place a premium on your customer's good opinion and at least try to get these right, then you're probably in the wrong industry.

Three recent experiences illustrate how easy it is to be nice, but still lose your customer's goodwill.

I want to give you money - 1

The craft shop was an Aladdin's cave of lovely things. Looking at all the pretty things, it took me a while to realise the voice I could hear from the other end of the aisle was aimed at me. I was being acknowledged by a salesperson, which is great, though as we hadn't made eye contact, it was a little awkward, which is less great. Her continuing to talk at me when I just wanted to be left alone was annoying. Still, pretty things to look at, so allowances made. 

Come time to pay for my selection, I waited at the counter...and waited...and waited.

Whilst one staff member was busy with a customer, the other was sitting at the back of the store doing some paperwork.

By the time the staff member at the back had finished what she was doing and started heading to the counter, I was already walking out the door (having placed the item back on the shelf, I hasten to add!).

It was a lovely store, and the staff were pleasant, but none of that makes up for my custom being less important than filling out a form.

I want to give you my money - 2

A small hobby business with an online presence was having a sale. We couldn't get to their store, so decided to place an order via their website. About to enter our credit card details, we noticed that the checkout wasn't a secure site, so were reluctant to use it and didn't complete the order.

After contacting the owner to ask if there was an alternative way of paying, explaining why we didn't want to use his website, we received an email telling us he couldn't hold orders open. No acknowledgement of our concerns and, seemingly, no effort to provide a solution. 

Will we go back to that business? It's highly unlikely. It's a good example of a customer prepared to pay more elsewhere for better service and peace of mind. 


I want to give you my money - 3

Picture taken at 10:55am, and still no signs of life.

I understand that sometimes you're unable to open for trade at the usual time: that's what cafes and newspapers are for. That said, I do expect you to be realistic in when you say you will open. I'm not prepared to hang around indefinitely, and nor should I have to.







As a potential customer, how did these instances alienate me:

• I need to have my space respected. It's great that I'm acknowledged, but it doesn't mean much if you're talking to my back, or continuing with an interaction I clearly don't want to have.
• I want to feel like the most important person in your store. I certainly want to feel more important than paperwork.
• If I raise a concern with you, I'd like it to be acknowledged. You may not be able (or willing) to do anything about it, but I'd like to feel you're listening to what I'm telling you.
• You don't have to make an effort to find a solution to my problem, but don't then wonder why I'm not bothering to come back.
• Don't steal my time. If you say you're going to be back at a certain time, be there. If you think it possible you'll be late, state a different time. 

I've talked before about the importance of reliability in building customer goodwill, because being nice just isn't enough.

Success can come accidentally - just not very often.

When what you do reaps rewards, it's a great feeling. But if you want that feeling of success more often, don't expect it to just happen, you have to plan for it. This is particularly relevant during the tough times when sales are harder to come by but costs as consistent as ever.
What's the easiest way to success? Involve your staff. 

Talk sales
If you're in retail, making sales is paramount. If it's important to you, it should be important to your staff.
Let them know your daily sales figures, and how they track against the previous year and target. A great way of doing this is a small whiteboard in the tearoom which can be refreshed daily. Better still, a sheet of paper detailing the previous year's sales and daily target for the week, which is updated with actual - and cumulative - sales on a daily basis. You can also do this for monthly figures.
You'll be surprised at how quickly staff engage with this sort of information, and start asking how sales are tracking throughout the day. 

Set sales related goals - and reward their achievement
More that just daily sales, you can also set goals around averages sales, items per sale and conversion.
This covers a lot of ground, which means you can keep things interesting; essential if you want to keep the momentum going.
A goal can be for any period you choose, but unless you're basing it on monthly sales, limit them to a maximum of two weeks. Longer than that and people start to lose focus and its effectiveness lessens.
Most importantly, remember to keep your goals SMART!

Recognise and reward great performance
If you want people to keep doing the good stuff, encourage them by acknowledging what they've done. Nobody operates well in a vacuum, and a bit of praise can go a long way. Recognising positive behaviours is about encouraging more of the same and setting new standards of performance for all staff.
Be creative with rewards, and know it's not just about money. An effective reward is anything the individual staff member or team values. It could be a chocolate bar, being allowed to go home early, additional responsibilities (yes, for the right person this is a reward as it represents trust), movie tickets, morning tea...or anything else you can think of. What you provide as a reward is limited only by your imagination and your knowledge of your team.
Unlike rewards for achieving goals, which are often discussed and set in advance, rewards for recognition of positive behaviours should be unexpected. Once people know that if they do A they get B, the reward loses its impact. Keep it unexpected and keep it fun.

In a nutshell:

• Share sales results with your staff - it's all about the numbers
• Set sales related goals
• Change the nature of the goals on a regular basis to keep people engaged
• Recognise positive behaviours
• Be creative in the rewards you give - but don't be predictable

Actively making your team a key part of your sales strategy makes achieving goals much easier - and running the business a great deal more enjoyable. Giving them different goals and sharing information with them also makes the job more interesting for them. After all, we all know how easy it is to get tired and jaded if you do the same thing day in day out with no variation and no feedback. 

Breaking it down and making it easier

As important as it is to set goals, they can be a little overwhelming. Of course we want to increase sales, run a major event or upgrade our systems, but how to do it and where to start? 

All big tasks are made up of many little ones, and the trick is in tackling them one by one. Start by making a list of what's involved, however minor it may seem:

• It makes it less likely that anything will be missed;
• It allows you to prioritise tasks, which is especially important when the start of one is dependent upon the completion of another;
• It encourages you to delegate.

Once you've made the list, you're better able to assess your resources and how you're going to use them. Set time limits and allocate responsibilities. In this way, what once seemed overwhelming is now manageable - you have created an action plan.

If we apply this to our previous SMART goal - to increase sales for the month of July by 10% on the previous year - the action plan might be as follows:

HOW	WHO	BY WHEN
Asking for every sale	All staff	Ongoing
Dedicated floor walkers during busy periods	Rosters up daily	All through July
Relaying fiction and new titles sections	Bob	3 July
Changing the staff recommendations display weekly	Gordon	Every Thursday in July

The action plan has three components:

• How These are the specific actions which have an impact on the outcome
• Who If it's everybody's responsibility then it's nobody's
• By when There's no point reaching the due date and finding that key elements haven't been done in a timely manner

The actions required will vary depending upon the type of goal set. Increasing sales has a different set of requirements to designing and printing a catalogue, and the task list will reflect that. However, the principles are the same: what is involved in achieving the desired outcome and how best to manage that process.

Some of the benefits of this approach:

• Utilising time and resources constructively;
• Being able to review successes and failures and learn from them;
• You're creating a template for how to execute a successful project;
• A useful training tool for developing staff skills;
• Minimises stress.

Remember the 5Ps and involve your staff in the planning stage if you can. No-one has a monopoly on insight or good ideas, so your action plan will probably be the richer for it. 

Breaking a goal down into smaller component tasks makes it much less stressful and more easily achieved. Less stress, better results - what's not to like about that?

How SMART are your goals?

You may have noticed that I have a love of acronyms. No, I will not LOL, don't do TTFN and as for PMSL, let's not even go there. But I do like an acronym which helps explain a concept and focus the mind. To that end, I'd like you to say Hello to SMART.

What does SMART mean?

• Specific If it's vague, it's meaningless.
• Measurable Are you able to quantify success?
• Attainable Make it too difficult, and you set yourself up for failure. It should be challenging, but achievable.
• Relevant Is it applicable and important to your business?
• Timebound When does it start and finish?

Let's put this into context.

"My goal is to increase sales". Sound familiar? It's certainly something I hear a lot when I ask about business goals. But is it SMART? Whilst it may be relevant, it lacks detail. When do you want to increase sales? By how much? What are you comparing the increase to? When will you assess the success of your goal?

If we take that goal and add a few simple details we can make it something easier to manage and more useful to the business: "I want to increase sales for the month of July by 10% on the previous year."

Is it specific? Absolutely.
Is it measurable? If you keep clear and accurate records of sales, and you have a reliable system which can tell you how much you have taken on a daily basis, then yes, it is measurable.
Is it attainable? Only you know that. If you've been experiencing sales increases of 2% like on like then aiming for an increase of 10% is unrealistic, unless you have special measure in place to boost sales. 
Is it relevant? Sales are always relevant in retailing, so a resounding Yes.
Is it time-bound? We have a start and finish date - the month of July. Again, a resounding Yes.

You can see how the second goal can be measured and reviewed in a way which the first can't. It's important to be able to review the success of your goal: you want to replicate what worked and change what didn't. Without this element of review, you're missing a key tool to develop and grow your business.

The principles of SMART can be applied to pretty much any goal, from redoing the window display to planning for a stocktake. It also has the benefit of taking something vague and overwhelming and making it accessible. For example, by being more specific about what you want to achieve, it makes it easier to think about how you're going to achieve it*. It also enables you to share your goals with your staff in a meaningful way (which WILL increase your sales)*.

SMART and I have become firm friends. I think you'll be smitten, too.

[*Want further information on breaking down goals and sharing them with your staff? If you'd like my next blog post to be about this subject, let me know. Hell, don't be bashful, let me know what you think anyway!]

Do you know what your shrinkage is?

Why is this important? Firstly, let's start by talking about what shrinkage is, because it's not just customer theft.

In its most simplified form, shrinkage is the difference between what you should have and what you do have. Whilst customer theft is a big part of that, and certainly the most high profile, so is staff theft (yes, it happens), short supplied stock, goods sold incorrectly, goods priced incorrectly, goods not received into stock correctly and so on. In fact, it's not uncommon for the largest part of your business's shrinkage to be down to internal rather than external factors. 

Which brings us to the importance of knowing what your shrinkage is: without measuring it, you can't constructively manage it.

Any business which relies on the movement of physical stock will experience shrinkage to some degree. However, without regular comprehensive stocktakes, it is very difficult to measure the extent of that shrinkage. Financial, or computer generated, stocktakes are useful in telling you what you should have, but without comparing that to a physical check, your shrinkage remains unknown.

I'm a great advocate of the annual stocktake; bringing in extra staff, shutting the store and checking everything - EVERYTHING - in one session. As much as this requires a great deal of planning and effort, as well as the cost of extra staff (how many staff is down to how quickly you want it done), it's outweighed by the benefits to your business:

• Having a clean database;
• Accurately measuring shrinkage;
• The ability to produce a report of all discrepancies;
• Being able to assess areas of particular risk;
• Discovering those items which should be gaining repeat sales but which have dropped off the system through loss;
• Calculating an accurate, rather than an estimated, cost price for stock.

Whether the cause is theft related or a matter of human error, it is within your control to minimise the extent of your loss. Unusual occurrences or patterns may be an indication of a larger issue.

Which department are being targeted?

You'll almost certainly find that some product is more prone to theft than others, and the results may surprise you. If this is the case, you may need to move sections around or reconsider your display options. In some cases, if the theft issue is particularly challenging, you may need to consider whether you stock the product or range at all.

Are certain areas of your store particularly prone to theft?

It may be that the location rather than the product is the problem. This is something you may notice as a pattern having done several stocktakes. If so, consider new lighting, redesigning the layout, or perhaps even removing and replacing units.

Does your discrepancy report show odd margins or quantities?

Your problem may be in the back office in goods receiving or data entry. It may extend to the accuracy of sales being put through the register or the way customer orders or laybys are handled.

The preparation for a stocktake can also highlight potential problems: are completed customer orders still showing as outstanding; are laybys being cleared promptly; stock accumulating in non-sale areas, such as behind shelving, in back rooms, under counters etc.

Look at a stocktake as an opportunity to gain an accurate snapshot of what's happening in your business, and you'll find numerous ways to improve both the efficiency and effectiveness of how you operate. There are so many benefits to running regular stocktakes that you'll wonder why it took you so long to start.

Don't sabotage your message

You want to convey a message to your customers, so you formulate a sign, have it made up and display it. What response are you hoping for? Chances are you're expecting an increase in footfall, wanting to raise your profile and be front of mind for potential customers or looking to reinforce your place as part of the local community. Perhaps all of these things. 
Unfortunately, too often good intentions are let down by poor execution and lack of care.

This got my attention for all the wrong reasons.

I came across this sign the other day. It got my attention, but left me shaking my head. The idea was a good one, and the window is in a great location, but many people will be walking away wondering about the professionalism of an outfit which can't get a simple sign right.

Pedantry? Perhaps. However, customers make shopping decisions for a myriad of reasons, some of them emotional and instinctive. If they're making a split second judgement of your store, make sure you're putting your best foot forward.

Whilst the example above is striking, there are other, less obvious, ways retailers drop the ball in how they present their message:

• Signs which are out of date, in poor condition or containing spelling errors;
• Handwritten signs (and not the creative, engaging kind);
• Sticky tape, fishing line, staples etc not cleanly removed;
• Too many messages;
• Not reinforcing what's stated externally, internally (if it's in the window, display it front of store, or at least make it easy to find).

The examples on this list aren't exhaustive, but they are commonly found. Unless you can say for certain none of this is going on in your store, then it's worth doing a walk through and checking for them. When you spend day after day in your store, it's easy to develop "store blindness", not noticing what's obvious to others. 

With so much competition for a customer's attention - and dollars - you can't afford to be ordinary. You certainly can't afford to look unprofessional. When you work hard to attract new customers and convince existing ones to return, it's a shame to undermine that effort with carelessness elsewhere.

Have you seen examples of good signs gone bad? Perhaps you have your own horror story. Don't be bashful, share the love.