Passport to Profit - New Service

PROFITsystems Launches "Passport-to-Profit"

- Home Furniture Business, June 7th, 2010

Furniture retail automation vendor and consultant Profitsystems Inc., Colorado Springs, Col., has launched "Passport-to-Profit," a new program designed primarily for new clients with the goal of getting them up to speed on their business' key metrics. The program is open to current clients as well.

Passport-to-Profit kicks off approximately three months after a client goes live on the software, or existing clients can participate any time they feel the desire for additional help. One of Profitsystems' customer satisfaction representatives works with the client to gather reports that provide baseline metrics on the business. The metrics include things such as GMROI, sales per square foot, and inventory to sales ratio. A senior consultant reviews the reports and metrics and formulates a plan specific to that particular business. The consultant and the client meet to review findings and provide the client a list of concerns and opportunities for the business. The consultant also makes recommendations as to where the owner and manager concentrate their efforts. After six months, the process is repeated to monitor results and offer new insights to keep the client's momentum going.

"We are in a unique situation where we not only have software to help manage a business, but a consulting department that can take a client to the next level, what ever that may be," said Profitsystems COO Shelley Parlin . "Many retailers come to use our software because they are either not able to make the profit that they should, or just can't grow their business with their current tools. Our new Passport-to-Profit project is exciting because from day one we can help them focus on the area where their business needs the most help, and we can provide them the expert advice that will get them there quickly."

In working with retailers to develop the program, Profitsystems found that many business owners know where their trouble spots are but just don't know the best way to overcome them. Others know that they have room for improvement but just can't step back far enough to see what they can change. Often, they have done things a certain way for so long that it doesn't even occur to them that it might not be the best way to do things now.

"Our mission is to make retailers more profitable and our software has incredible tools that do exactly that," said Profitsystems CEO Jeff Niskern . "We also know that owners and managers get pulled in so many directions by the day-to-day operations of their business that effectively tracking everything they have to do is extremely difficult. This new project gives us a great opportunity to step in and help executives look at their businesses with fresh eyes to see what opportunities they have to impact their bottom line."

For more information on Passport-to-Profit contact Wayne McMahon by e-mail.

e-Marketing Flash Demo - now online

Increase traffic!
Use value added, targeted email campaigns from your PROFITprofessional database.

Watch the 10 minute Demo

Flash Demo #1: PROFITdelivery

We have added a flash demo section to our blog. On the right side column we will post product demos that run automatically in your browser. They are audio as well as video (so make sure your volume is turned up).

Our first is PROFITdelivery. This is our routing and mapping service that interfaces from PROFITprofessional.

The difference between a high profit operation and an average operation with respect to the delivery department is 1% of sales. You will save at least 10% on fuel costs alone!

Watch the PROFITdelivery Demo

21 Profit Pointers:

1. Document Specific Goals. Get weekly metrics. Report to the team. Offer incentives.
2. Improve All Departments. Sales. Administration. Advertising. Warehouse. Delivery. Service. Finance.
3. Create Contribution Margin Statements. Monthly. Automatically. Improve break-even. Improve profits.
4. Implement CCC (Customer Care Center). Track sales metrics. Improve sales performance. Elevate customer service.

Click HERE to get all 21 Points

How's Your Customer Experience

Latest Blog post from HFB Magazine.

Growing Great Talent

Sunday April 18, 2010
2:30 PM - 3:30 PM
Growing Great Talent
Plaza Suites, NHFA Retailer Resource Center, Plaza Suites, 1st Floor
Presented by: Phyllis Zaepfel, PROFITgroups. Searching for, finding, cultivating and retaining extraordinary employees who love what they do and excel at their jobs can be a challenge. Join us for this seminar where you will learn best practices in recruiting and hiring the right people for the right job. We will examine training methods to grow, mature, nuture, and ripen your staff. You'll discover what is needed to retain them so your best employees will not want to look for greener pastures. www.profitsystems.net. No charge/no registration to attend.

PROFITgroups Colossal Presentations

It was great to see the motivated business people that attended our PROFITgroups Colossal event last week. I believe that they all have identified some new goals, reinforced some long term goals and are ready to take action. It's all about constant improvements that lead to a greater future.

Our consultants, Wayne, Chris and David are here to help implement any of the business advancements that were discussed.

Thanks!

Wayne, Chris, David

Links to Presentations:

SEO

Capture Your Design Trade

Increase Profits

Social Media

What's New / Roadmap

Reporting

Sales Management

Leave a Legacy

Recovery!

Are there any areas that you would like to learn more about or do you wish our assistance in implementing?

Colossal Presention on Recovery

Here is the link to download the Updated Recovery Presentation for the Colossal Conference in Colorado Springs. Contact us if you have any questions. Thanks!

DOWNLOAD Updated COLOSSAL PRESENTATION

Recovery! Presentation

Click on the slide below to download a .pdf of my Recovery! presentation at the World Market Center.

Las Vegas Market Seminar Invite

Wednesday February 3; 10:30 – 11:30 a.m.

RECOVERY!

David McMahon, PROFITsystems, Inc.

Now is the time of opportunity — don’t miss it. Let David show you how you can maximize cash and profitability while you ride the bumpy road up the mountain of economic recovery. He has traveled throughout North America and around the world helping operations like yours and has witnessed the most innovative and proven methods of creating cash, in any economy. Come and see how you can make amazing gains by executing various strategies that can affect your entire operations.

WHFA Site

Las Vegas Market RRC Schedule

"What Are You Seeing Out There?" -- Retailer

This is one of the most common questions that my consulting clients ask me. They want to know: "What is happening with the businesses that I visit around the world? How are other operations doing in this economy now? How are consumers responding? What is working and what is not working? Are people buying? Is the general feeling up or down?"

Here is what my experiences are telling me now:

This has undoubtedly been the worst recession in America since the great depression. It is the biggest that I have experienced in America in my career. (Although the Asian banking and currency crisis was just as big in the mid-90's when I was working there). The primary U.S. stock market (Dow Jones Industrial Average) fell from a high of 14,500 to 6,500. Trillions of dollars have evaporated. Along with this, unemployment rose steadily as consumer spending plummeted.

Independent retailers sure have felt their fair share of this loss and I really believe they were the hardest hit sector in the U.S. economy. We can all name numerous companies that have gone out of business in the past two years. For those companies that have hung on, I've seen some with 50% drops in sales from their "glory days" and 20% declines have been commonplace.

That said, there were bright spots. Select operations have managed to bust their butts, work smarter, and innovate to avoid declines. Some have even had increases in sales.

But there is something more important than sales: PROFITABILITY! That is a prerequisite and determinant of sales growth. During the recession, I have seen that the most profitable companies were still the most profitable companies, regardless of what has happened to their traffic and their sales. Great businesses have remained the same great businesses in the recession as in the boom.

In my opinion, a great business is defined as businesses with people that embrace learning, innovation, efficiency, self-investment, integrity, and respect for all. They mandate excellence and high profitability. They can make quick decisions, manage professionally, and execute their strategies. They enjoy the process of getting better at what they do.

So, what's next?

The recession is over. Recovery has begun. The economy and retail sales have stabilized. Revenues have stopped declining. That means, and I will repeat, THE RECESSION IS OVER!

Smart companies have restructured themselves during the downturn and are seeing decent profitability levels again. Just look at the earning reports on CNBC. Even though sales are flat and definitely nowhere near peak times, in most cases, earnings are good.

Across the U.S., retailers that we work with are doing the same. They are becoming efficient at their new sales levels through maintaining proper inventory mix, capturing appropriate gross margin, changing marketing methods, and investing in expenses that add rather than take away from their businesses.

It is extremely important that you have decent profitability at this point in the economic recovery. First, it will determine whether you will survive the bottom that we are currently in. Then, this efficiency will allow you to reap the maximum benefits in the future when consumers return in larger numbers.

If you are not maximizing your profitability now, do so quickly. To do it right, and as fast as possible, you should contact us and we will help you as we have helped others.

Advice:

Don't worry about the PAST. It does not exist. It does not matter if sales once were double where they are now. What matters is NOW!!! Get your business in order NOW. Turn your fixed expenses into variable expenses NOW. Build your productivity and profitability NOW. Your future will thank you.

Good luck!

Warehouse Case Study on Client: Sherman's Furniture

Here is a great article about a great company. Dan Bolger writes about the Sherman's distribution center and their management's commitment to efficiency and excellence.

"The bottom line summary is that the lines of communication are short at Sherman’s and the management team moves quickly to resolve issues. Their attention to customer satisfaction will continue to serve new and existing customers while providing additional opportunities for their employees." --- Dan Bolger

Read the Article

Furniture World Article on using GMROI and IGMROI

Track this inventory metric to understand your customer’s buying patterns, establish a more relevant product mix, satisfy more people and sell more.

by Daivd McMahon

Consumers’ tastes and the economy are constantly changing. Some vendors and categories that were once popular are not anymore. You cannot control your customers’ tastes or the economy, least of all, through general advertising. This is impossible. If you agree, ask yourself, “What can I control?”

In this article, you will discover how to listen to what your customers want in order to make more informed purchasing decisions. If you can manage a process, you can influence and control it. So, by better understanding your customers buying patterns and establishing a more related product mix, you will satisfy more people and sell more.

First, take the guessing out of the equation. There is only one group’s opinion regarding the desirability of purchasing your products that matters. It’s not your buyers, your reps, suppliers or your competition. And, it’s not you or me. It’s your customers!

Buying is analytical. You need to know what your customers are purchasing and what they want to buy from you in the future. With any top industry Customer Relationship Management (CRM) software, this data should be readily available to you.

Read the full article in the latest issue of Furniture World

Five Common Questions about Inventory Management

by Chris Millet, Business Coach

As I work with clients on proper inventory management techniques, I encounter some common questions and concerns. I thought we may have other clients who have the same questions, and decided to share them with you. Most of these concerns stem from a perspective, which has caused improper inventory management in the past. Our inventory management techniques are time-tested and proven, but, as with any new technique or process, inevitably there is a resistance to change and a fear of the unknown. The following is a list with responses to five of the most common concerns, expressed to me recently.

1. In today's economy, customers are looking for inexpensive items and immediate satisfaction, which many times causes me to sell my floor models. How can I nail my best sellers to the floor and still satisfy my customers?

Click here to read the full article

Web Summit 3.0 Presentation - From Las Vegas World Market Center

Thank you for all those that attended. Download the pptx, or the .pdf.

Web Summit 3.0 Live or On-Line - Register Now

Web Summit 3.0 - Live or On-Line Is your online strategy struggling? Do you even have an online strategy? The third Industry-Wide Web Summit will unite home furnishings retailers, manufacturers, representatives and suppliers. Monday, September 14, 2009 | Opening day of the Las Vegas Market Building C | 9th Floor | Room C976 | 1:00 pm - 4:00 pm You will leave the Web Summit with practical, real world information and implementation strategies for all areas of electronic media and web for the furniture industry. Seating is limited. Registration is required for this free event. How to Implement Email Marketing and Social Media for Results David McMahon | PROFITconsulting Throw Web-Based Marketing Into Your Mix Ron Carpenter | Strategic Marketing Solutions LLC Demystifying the Online Furniture Shopper David Lively | The Lively Merchant Create an Engaging Website that Brings Your Brand to Life Online Renee Loper | aspenhome For additional information, please email consulting@profitsystems.com

How to Make Your Website Really Sell - Entrepreneur.com

This article echo's what we are doing with our new web product: e-Showroom.

This is a good introduction to the tactics, tools and features that have consistently worked for entrepreneurs:

Site functionality
Site aesthetics
Tech tools
Capturing customer information
Follow-up communications
The Mystery of Metrics

How to Make Your Website Really Sell - Entrepreneur.com

The best advice for converting visitors to your company's website into real revenue.
By David Port | Entrepreneur Magazine - September 2009

...It also features a quote form one of our partners: David Lively

Common Characteristics of Profitable Furniture Businesses

Furniture World Article
by David McMahon

Truly, the families in the home furnishings industry are some of the most gracious, fun and down to earth people. This is my personal experience for all good, average, and poor business operators.

If you have been reading Furniture World for a while, you can see that our Editor’s main agenda is to help the people in this industry succeed. When preparing for my first article a few years ago, he said to me, “I want you to write about what people are asking you in the field. Write about common challenges or questions that they have.”

This month, after writing three completely different draft articles for this issue, I refocused on that original request after visiting a business with a ton of potential. This made me think of the two most common questions that I get asked by business owners:

“What have you seen the best operators do?” and “What common mistakes do you see in poor operations?”

Everyone wants to know what is working, right? And, of course, you all want to avoid the pitfalls.
The heart and soul of the furniture business is comprised of independent family operations. At one time I thought that would change. Now I believe that this will remain the norm for some time. That said, only some independents will prosper. These are the ones that operate as true professional organizations that leave any dysfunctional family issues at home.

The most profitable businesses have family members that work well together and complement each other’s skills. They act with intelligence and professionalism in their jobs. And they never stop pushing themselves to become better than anyone that they could hire for the same money that they are paying themselves.

On the other hand, family businesses that don’t adopt this business ethos or stagnate, have lower profitability. They are reactionary, and manage by “the seat of their pants”. These businesses need to improve their ability to survive the next decade as legacy does not extend into the future.

Now, back to the best. Another trait of successful operations is the owner’s ability to innovate. They implement the most current systems so that they can keep a constant finger on the pulse of their businesses. If sales go down, they know why and can adjust quickly.

They don’t just complain that “It’s slow”. That means nothing in itself. If cash flow is up or down, they know exactly why. The best have positive cash flows, even during recessions. Poor businesses take excessive loans (from banks, vendors, and customers) even in the boom years.

Innovation flows through all aspects of great operations. They implement the best procedures first, and try new ideas.

Read the full article

The Importance of Proper Daily Procedures and Data Analysis

Chris Millet, Business Coach

It is amazing how often proper daily procedures are not followed when using PROFITprofessional. Whether you are a long time user or just getting started, I often find a multitude of ways in which clients process their daily work. Many times these processes include manual procedures to handle "outside of system" tasks and reporting. These outside processes essentially add up to "double" work as much of the same information is also entered into PROFITprofessional. When asked why manual systems are employed, the standard answer is, "This is the way we have always done it". The cause of this situation stems from many sources including lack of training, misunderstanding about system processes, and a lack of knowledge regarding system capabilities. In short, many users "don't know what they don't know".

Click for full article

Thank you for attending the webinar!

We hope that you enjoyed the PROFITinnovation Webinar and will implement one or more of the 21 Best Practices. Your profitability will surely increase!

To take your next steps and receive additional information please click here.

We are making the presentation available to you in your choice of format. Simply select and download.

Audio Presentation

Complete PowerPoint

PowerPoint Presentation in .PDF

We look forward to bringing you more education events in the future.

If you have any questions or require any further information, please email or call us.

PROFITinnovation Webinar - Wednesday Aug 5th 12:00PM Mountain

Complimentary Webinar 21 Best Practices Used by Innovative Retailers Discover the secrets that only the most profitable furniture retailers utilize. PROFITconsulting Senior Consultant and Furniture World Contributing Editor, David McMahon, will be presenting 21 innovative practices that help retailers maximize profits and cash flow. From this webinar you will not only learn what highly successful retailers are doing, you will also be given proven strategies to get the upper hand on your competition. There will be a question and answer period at the end where you can ask how you can apply any of the practices. Date: Wed. August 5th, 11 a.m. PDT, 12 p.m. MDT, 1 p.m. CDT, 2 p.m. EDT Duration: Approx 40 minutes plus question and answer period Join us for this Webinar on August 5 Space is limited. Reserve your webinar seat now at: https://www1.gotomeeting.com/register/361477657 After registering you will receive a confirmation email containing information about joining the Webinar.

Recommendation from the NHFA Retailer of the Year

We encourage all businesses to have a profit maximization analysis (PMA) performed on their operation.

The purpose of our PMA is to study and report on your most important business metrics, so that we can provide you with recommendations on improving your profitability and cash flow.

A long term client of ours, Kent and Beckey Waldrop of Miller Waldrop Furniture, recently were awarded the NHFA Retailer of the Year. Kent stated:

"PROFITconsulting has helped us take our business to another level. They work with us in implementing best practice operations and procedures, financial management, sales management, bar coding, and e-Marketing. I recommend that if you wish to improve your profitability you contact them. A great way to start is to have a PMA (Profit maximization analysis), prepared by PROFITconsulting."

Please download a sample of a PMA report and you will see the value. There is nothing like it in the industry.

If you interested in a profit maximization analysis on your business please email us at consulting@profitsystems.com

PS. - we are now posting best practice tips on Twitter at: http://twitter.com/profitcoaches. It's easy to join and follow. And, as always, you can get our latest presentations and articles on our blog at: www.profitconsultingblog.com.

Thanks!

The Business Coaches at PROFITconsulting, PROFITsystems

Follow Us for Tips that increase Cash Flow

We are now posting best practices on Twitter. We encourage you to join and follow.
It's easy, fun, free and educational. And --- You need to learn how to do this properly (provide value, interest and relevancy) to communicate with your customer too. The new wave of communication advancement continues...

http://twitter.com/profitcoaches

By the way, we will be assisting retailers with social networking implementation, complimenting our integrated e-Marketing package.

Importance of Profits

This presentation on the Importance of Profits has been developed for the PROFITgroups Visionaries meeting, being held in Ft. Wayne, IN July 13-15, 2009.

2 great new articles in Furniture World

Here are 2 articles posted by colleagues and partners of PROFITconsulting:

The Absurdity Of Family Business Decision Making

"If you are making business decisions based on a consensus to avoid familial discord, you may be setting the stage for trouble."
- David Lively

Can You Embrace Meaningful Change?

"A commitment to change is necessary for home furnishings retailers that hope to relate to consumers in the post recession period."
- Joe Capillo

Modernizing Inventory Control, Management and Analytics

Here is a 5 minute video I found on YouTube. It shows how an independent retailer uses technology to propel his business to reach profitability and to grow.

The owner says (at 3:30 min.), "We look at it as an opportunity investment (over $50,000k / year) that helps us grow our business, not as an expense".

Campaign Ideas

Who participates in e-Marketing in your organization?

Everyone on your team contributes. It all starts with the salesperson interacting with the customer. The salesperson must be trained to acquire the information to follow up which increases be-backs and sales. The information is entered into PROFITprofessional, your CRM (customer relations management). Queries are extracted and emails are sent by your office or marketing person. The emails are personalized and signed by the salesperson automatically to add a personal touch.

Click here for some targeted campaign ideas

Evaluating Employee Profitability

Last month I wrote about evaluating the profitability of customers. This month, I want to discuss employees.

First and Foremost: The Right People
In the book "Good to Great", Jim Collins wrote that in great companies the leadership made certain that they got the right people on the bus, and more importantly, the wrong people off of the bus. People need not only to be the right fit but they have to be in the proper seat. How do you determine who is right and the seating arrangement?

At zappos.com (a company that went from zero sales 10 years ago to a billion dollars in sales of shoes, fashion accessories, and clothing last year), they have a very unique way to get the right people on the bus. Not only do they train each person for four weeks in all departments, regardless of what position they are being hired for, they offer each trainee $2,000 after the first week to quit. In 2007, the offer was $100 and 3% opted out. In 2008 the offer went up considerably and only 1% took it. Tony Hsieh, the CEO, explains the biggest benefit comes from the people who don't take the offer. They are more committed and engaged after turning down the cash. The other important factor is that those who decide to leave are not a drain on the company's training resources and culture.

Measurable Metrics
You can't improve what you do not measure! Determining ratios for sales by employee is simple to calculate and should be looked at regularly. NHFA and PROFITgroups benchmarks are available for sales by all employees, by salesperson, warehouse staff, and administration. Revenue per up is another important factor in measuring productivity for salespeople. Expense per employee is a little more difficult to determine, but it can be done with some basic estimations and calculations: Income - (cost and expense) = employee profit or loss.

Too many times we see employees hold employers hostage for imaginary reasons. A top sale writer that causes problems and affects the morale of other employees is probably one of the most frequent scenarios heard. In family businesses, there may also be others in the organizations that have worked there forever and a sense of allegiance becomes the issue. Of course, quite often there is also the family member or two that doesn't pull their weight. With measurable metrics, leadership can begin to address the productivity issues with emotional detachment and begin to create an empowered staff of quality people.

Increasing Profitability
Leadership is always responsible for increasing employee productivity. I am not suggesting you fire all your unproductive employees without first working with them and counseling them to increase their personal productivity and improve the bottom line of the company. Should you however, have to rid the organization of an unproductive employee or two you, will most likely find others who will soar in height from cutting out the excess dead weight.

Once you determine if you have the right people in place, you need to learn what motivates them. For some it is monetary incentives, but more often than not, people want to be recognized for the effort and contributions they make. It is not one size fits all when it comes to incentives and rewards. Acknowledge your profitable employees. It doesn't have to be costly but rather should be personalized for each individual.

FHTRB
In our PROFITgroups meetings, we address - Finding, Hiring, Training, Retaining, and Building employees. You have heard the saying, "People are our most important asset". Well, that isn't completely true, only the right people are! In future articles, we will look at each of these components for building a better team.
If you want to learn more about how successful and profitable companies staff for greatness, check out our PROFITgroups program. For more information or if you have questions contact Phyllis:
Via email at phyllisz@profitsystems.com
By calling 800.325.2018
By visiting us on PROFITgroups Facebook
By following PROFITgroups on Twitter

e-Marketing Version 3 Released

We are pleased to announce some exciting new features which are now available. The latest version, 3.0, now includes these and many more great features that will further assist your targeted marketing efforts.

Surveys & Forms are available, without cost, for the balance of this year.

Use these for :

- product & service evaluations
- asking prospects what they are interested in
- on-line applications and forms
- follow-up surveys on deliveries, sales performance & events

Ad Templates

-A great selection of ad templates has been provided,
through our partnership with The Lively Merchant.
-There is a nominal cost for these templates and complimentary marketing
programs are available.
-Easy to use in your marketing campaigns.

Newsletter Content

-Also available is a great choice of informative articles, which
can be selected for inclusion in your next e-Newsletter.
- Gets you started fast!

Increase your "Be-Backs"

-To further enhance your ability to follow-up on prospects,
recorded as a CCC Opportunity, we have added the capability of
pulling the "reason for no purchase" and the "category of interest".
-This will allow you to follow up with very targeted emails, which
will greatly improve your be-back and sales closing rates.

Greater Delivery Confirmation Capability

- Now you can pull un-scheduled deliveries, so that you can easily follow up by email, to confirm a delivery date.
- This will assist in improving your cash flow and GMROI.

INNOVATION – What sets some retailers apart from the crowd

A global survey conducted by a great new magazine, Monocle, found that the single most important element you need to get consumers excited and stimulate spending was a passion to constantly innovate.

This gave me an idea for a presentation (and possible webinar) that I will be creating. I'll show you what forward looking and creative retailers are doing in the Home Furnishings Industry and beyond. And also, how you can REALLY listen to your customers and then provide them what they want.

My goal is to help you breathe new life into your operation and change from doing things the same old way.

Set your self apart from the crowd - INNOVATE.

I'll let you know when my presentation is ready or let us know at PROFITconsulting if you want to start innovating now.

Shift To Modern Media: The Power Of e-MARKETING - Part 2

Furniture World Article Part 2:

Three critical tips to make email marketing work

Operations by David McMahon

In the January/February 2009 issue of FURNITURE WORLD Magazine we looked at four techniques that are essential for the successful execution of an email marketing strategy.

First, you must think of value when contacting your customers.

Then, ask for your customers’ permission.

Next, introduce new media partners to your marketing mix.

Finally, start to reallocate your marketing budget to bring it into alignment with how today’s consumers want to be reached.

Read the full article in the April Issue of Furniture World

Miller Waldrop named 2009 NHFA Retailer of the Year

Congratulations to our long time clients and friends Kent and Beckey Waldrop of Hobbs, NM.

I have seen first hand their commitment to training and hard work to enable the success of their business. Over the years they have sought to continually improve themselves with respect to business operations, and the management of their financial, inventory, sales and marketing systems.

They are leaders in their industry.

Read the Furniture Today Press release.

MillerWaldrop.com

The Definition of GMROI

by David McMahon

GMROI is your gross margin return on your inventory investment. This is how much money you receive after the sale per dollar of inventory invested. So if you have $1 million in inventory and your gross margin dollars are $1.9 million for 1 year, you produced $1.90 GM per $1 in inventory.

GMROI is the single most important metric that an inventory carrying business can track. This is my opinion because it is tied directly to 3 major forces determining cash flow.

The first is gross margin. Gross margin determines what you have left to pay for all your business operating costs. And after all operating costs are covered, what remains is your net income. That net income is the first line under your starting cash on your cash flow statement. Profit is NOT optional.

The second is inventory. Inventory is the biggest current asset on many companies balance sheets. When it goes up, GMROI goes down and so does cash. If it is increasing, so must your gross margin dollars.

The third is operating costs. Most of the operating costs of inventory burdened businesses are due to carrying inventory. These are called inventory carrying costs. In many instances they are above 30% of sales. These costs come in the form of warehousing, people, distribution, financing, shrinkage, supplies and equipment. The higher the inventory, the higher the operating costs, the lower the profit. Vise versa, the higher the turns, the lower the inventory, the lower the operating costs, the higher the profit and cash flow!

So here are some ways that we have helped business all over the world increase cash by increasing their GMROI:

· Increase Sales by tracking and improving the sales equation

o Traffic x close rate x average sale

o Increasing best seller in stock days via better purchasing practices

o Increasing fabric protection ratios

o Sketching and house calls

o Correct staffing levels

o E-Marketing as a Follow up tool, increasing be backs!

o Nail downs of new and best sellers

· Increase gross margin dollars

o Pricing techniques for new items and best sellers

o Special order

o Price point tracking

o Markdown systems and strategies

o Variable commissions based on margin

· Increasing turns and getting inventory to an efficient level

o Open to buy rules for new merchandise

o Faster merchandising

o Faster delivery scheduling

o Category and vendor analysis

· Customer service improvements

o Better customer service

o Less damages

o Less complaints

o Greater VCB’s

· Decreasing inventory carrying costs

o Analyzing with respect to NHFA and best practice operations

o Setting budgets and financial forecasting

o Implementing actions!

I encourage you to schedule a free demo and consultation so that you can improve your GMROI. A 10 cent improvement in GMROI is worth and extra $100,000 to a business with $1 million in inventory.

Direct Marketing to Account for 53% of US Ad Spend in 2009

Remember, proper e-Marketing (Direct email and web marketing) is about targeting a specific audience for new and repeat business and providing valuable contact. It’s not e-blasting and far less interruptive than old print or broadcast media...

Some Notable Points from Direct Marketing Association's 2009 Report in this article:

* Sales generated from direct marketing should continue to rise in 2009 and are forecast to grow by 4.5%, to $2,150 billion.

* Higher Return on Investment: For 2008, an investment of $1 in direct marketing advertising expenditures is predicted to return, on average, $11.63 in incremental revenue across all industries. This exceeds the $11.56 achieved in 2007 and is expected to improve further to $11.74 in 2009.

* Growth for Interactive Marketing: Expenditures in the newer online media will maintain significant growth in the coming year. Commercial email will continue to claim the top growth ranking for 2009, while internet advertising will claim more than 15% of all direct marketing advertising dollars in 2009.

* “Direct marketing’s integration of multiple sales channels and highly targeted offers means that businesses utilizing direct marketing typically outperform their competitors, even when sailing into financial headwinds,” Peter A. Johnson, PhD, DMA’s VP, strategy, analysis, and planning, and lead author of the report.

Full Article

- See also: Direct Marketing Association