Okay, so it's February, what of it? If you own a business and you haven't decided what you want to accomplish this year, now is the time to figure that out.
A few weeks ago I attended the Catholic Marketing Network trade show. I gave a presentation on why it is important for stores to have a website. During the presentation I asked how many stores had set goals for the year. Three people raised their hands. With that kind of response it's no wonder that Catholic stores close as fast as they open.
Whether you see your store as a ministry or a business or a ministry run like a business (the best choice), you have got to set goals each year. Otherwise, you will end up in the same place you are now or worse off because someone out there is setting goals and trying to reach them.
So how do you decide what your goals should be? Before you decide that you need to know what characteristics good goals have.
Goals are measurable. If you can't put a yardstick to the goal, you will never be able to really say that you achieved it, exceeded it or fell short of it.
Goals are time-sensitive. If you don't set a date to achieve a goal it is unlikely you will ever finish because other things will get in the way.
Goals are achievable. Don't set a goal that this year you are going to increase your sales by 500% unless you have a realistic plan to do so.
Goals are planable. I don't think that's a word but the point stands. When you are thinking about what you want your goals to be ask yourself if you can write a plan that explains how that goal will be achieved. If you can't write the plan, choose another goal because this one isn't going to happen.
Goals should take an effort to achieve. What satisfaction is there in setting a goal for 10% growth this year if you always grow by 10% every year? Set the bar high and also choose a reward appropriate to the difficulty in achieving that goal.
Goals should make your business healthier. If you have a goal to paint your store purple but doing so won't improve sales, back away from the paint can.
Okay, so now that you know what a good goal looks like, how do you decide what to do?
First, you need to ask yourself if you have any past data on which to base your goal. If you set a goal to increase your gross profit by 20% but have no idea what your gross profit was the year before, the goal is useless. Here is a brief quiz that will help determine what your goal for the year should be:
- Can you tell what your gross profit for the year was last year?
- Can you tell what your top 100 sellers were and how many you sold on average each month?
- Can you identify your top 20 retail and top 5 parish customers?
- Can you identify what items in your store didn't sell last year?
- Can you tell by gross profit what your top two marketing efforts were last year?
- Can you tell how many sales were produced by yellow page ads?
- What was your return on investment for online advertising?
If you can't come up with these numbers in about ten minutes, then I would suggest that your goal for this year be to figure out how to measure your business. If you have a computerized point of sale system this could be as easy as calling your vendor for help. If you don't then your goal for the year should be acquiring a computerized point of sale system to run your store.
If you were able to answer the first five questions, congratulations: you are doing better than about 70% of all Catholic stores. If you couldn't answer the last two then I suggest that one of your goals for the year be to figure out how to track as much of your advertising as possible. One of the easiest ways is to turn any print ad into a coupon so you can record how much you made on sales with the coupon.
If you are measuring your store now, here are some goal ideas for the year.
- Make sure all price lists from vendors are current twice a year. If you aren't on top of pricing, this can kill your profit. That 14kt medal you just sold for $200? It cost you $180 instead of $100 because you didn't notice that the vendor has raised the price on gold items twice in the last year.
- Don't carry products that you make less than 40% profit on unless you have a very good justification for doing so. As an example, we carry the Didache high school textbook series which only gets a 20% wholesale discount. We carry it because it gets us contacts with schools that we can sell other items to in bulk at much better margins.
- Do book fairs at two parishes you never have done book fairs at before. This is a good way to get some extra exposure with people who may be unfamiliar with your store. Part of doing this effectively means making sure that your name is visible and you give everyone who walks by a business card or a flier with a map.
- Co-sponsor a diocesan event. You might not have to pay very much to get your name on every flier sent out for the next Christopher West talk.
- Go visit your bishop. Your bishop may not endorse your store but if he knows you exist and you can be on good terms with him, you won't be any worse off and you might end up getting asked to participate in events you wouldn't have otherwise.
- Get a website. You can gripe all you want about Amazon stealing your business but if you aren't willing to even step on the field, you have no reason to complain.
- Write manuals for your store. If you are like most store owners, you are pretty chained to your store because you are the only person you trust to run it and you will be running until you drop dead of a heart attack while handing someone a St. Peregrine holy card at your counter. Document how things work at your store so you can go on vacation. Then find someone who meets these qualifications:
- You trust him.
- He can read.
If your manual is good, your substitute manager should be able to find anything he needs in it to run the store while you take some time off. I know it can be hard, so treat it like babysitting. The first time you leave, take one day off and sit in your car across the street from the store all day to make sure that it doesn't burn down. If the day is a success, you can stop worrying so much and take a little more time off. After a couple of years you should be confident enough in your manager's abilities to go away for a few days to another city.
So what if you have no idea what your measurements were for your business last year? If you have a computerized point of sale system, most of the information you need is buried somewhere in that system. If your vendor can't tell you how to get the information out, you need a new system because these measurements are vital to growing your business.
Here are a few basic measurements that you can do on paper if you don't have a system yet:
- Gross Profit – This tells you how much you make on average on the products you sell. To determine this, take the total cost of product (I would include the shipping charges from the vendors) and divide it by your total net sales (minus things like gift wrap and embossing). This number should be between 35% and 55%. If you are doing less than 35%, you need to examine what you are selling and find some better vendors.
- Turn Rate – This tells you how many times your inventory “turned” in a year. This lets you know if the product you stock is what people want to buy and if you are stocking enough of it. To calculate, take the total cost of goods for the previous year and divide that by the average value of your inventory on hand. If you are a regular store that sells most things to customers who walk out with the product, your turn rate should be between four and six. If you are a church goods dealer or do a lot of business on-line with drop shipping, your turn rate could be much higher because you sell a lot of product that never becomes part of your physical inventory.If you are a regular store and your turn rate is less than four, you need to figure out what items aren't selling and either return them or discount them to get them out of your store. Then you need to figure out why you aren't carrying things that customers want. If your turn rate is great than six then you might not be stocking enough inventory because you are constantly reordering and probably losing sales because you don't have enough inventory on hand to satisfy demand.
- ROI (Return on Investment) – This tells you if your marketing campaigns are actually making you money. To calculate, take the total net you made on the campaign, subtract the cost of product and divide by the cost of the campaign. Hopefully this number will be much larger than 1.For example, pretend that you invest $100 in a newspaper ad. Because you have planned ahead, you have made the ad a coupon that people need to bring in to redeem so that you can track your advertising dollars. You sell $1000 net product from the ad. After subtracting $600 for cost of goods, you have $400 left. Divide that by $100 and you get 4, meaning that your marketing investment produced a 400% return. It's up to you to determine if that is a good use of your money or not but either way, you have the numbers to make an educated decision.
Did you notice that I described your marketing expenses as an investment? If you are marketing correctly your money should never be an expense because you are planning on getting a return on the money. If you don't have any way of tracking your marketing then your marketing really is an expense because you have no idea what you got back on the spending.