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Parker Karnan [email protected]
Karnan Associates, LLCA small business for small business
Business Breakthrough
What is your Your #1 responsibility
In
Business?
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Are you leaning into
The Dip?
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What is your
“kiss on the forehead”
test?
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How do you slow down your life&
Speed up your business
SIMULTANEOUSLY?
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Are you managing people or circumstances?
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What really is the difference
between
leading and a managing?
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What is your current
Rally Cry?
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A small business is
the direct offspring of
its owner.
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Knowing that you don’t know
something can be a problem...
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Not knowing that you don’t
know something can be fatal.
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Life is merciful, but unfair
Business is unmerciful, but fair
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-Bo BurlinghamAuthor of Small Giants
Good managers do things right.
Good leaders do the right thing.-Warren BennisProfessor on Leadership
Univeristy Southern California
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The best course for any leader is to be feared (respected) and loved at the same time.
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But if it is impossible to be both, then he should choose fear (respect) over love.
-Machiavelli
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Failure of a leader to enforce the rules out of a desire to incur the affection of his followers…
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…can bring that leader to ruin in a hurry.
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-Steven B. SampleAuthor of The Contrarian’s Guide to Leadership
Never make a decision yourself that can reasonably be delegated to an
employee
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-Steven B. SamplePresident of USC
Never make a decision today that can reasonably be put off to tomorrow.
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-Steven B. SamplePresident of USC
If you leave a white post alone, it will soon become a black post…
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Briefly, if you want the old white post, you must have a new white post.
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-G.K. Chesterson
Stewardship rates barely an honorable mention in the lexicon of current business terminology.
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A scan of cover stories business periodicals revealed that ‘strategy’ was explored a total of 57 times.
Stewardship was completely ignored.
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-Life@Work Journal1998
Energy is more efficient than efficiency.
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-Franklin D. Roosevelt
Anything worth doing
at all…
is worth doing poorly.
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-Richard P KarnanSuccessful Father and Businessman
When a new book appears, one should read an old one.
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-Winston Churchill
Effective leaders don’t run their businesses.
If they did, they would be called runners.
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Leaders lead individual followers, who collectively give motion and substance to the
organization of which the leader is the head.
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-Steven B. SampleAuthor of The Contrarian’s Guide to Leadership
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Parker Karnan [email protected]
Karnan Associates, LLCA small business for small business
Business Breakthrough
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Is my business viable?
Managing problems and opportunities
Focused on Strategy and
Tactics
The entrepreneur’s dilemma:
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Session #1: 1:30-2:40 What to Manage and How to Measure it
Session #2:2:50-3:40 The ‘Kiss on the Forehead’ test
Session #3: 3:50-5:00 How to Lead and build a Team of followers
•Accessible v. Available•Upward mobility v. Downward mobility•Giving up the keys
When to hold on; When to let go
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Revenue per Foot
2009 Sales Plan $1,000,000
Sq. Ft. 2,000
$500 per foot
Quantitative
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Retail is a highly reactive business. As a result you must be highly proactive
Session #1: Know what to Manage
It all starts with the Sales Plan
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70% of your expenses go towards Inventory and Payroll
Session #1: Know what to Measure
Gross Margin
Inventory Turnover
Average Inventory on Hand
Months of Supply (forward cover)
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QUICK TIPS• Footwear capacity: 1500 shoes
• Avg. Retail: $100 X 1500 units = $150,000
• Annual Footwear Sales: $600,000• Turns necessary to justify investment: 4• Annual Sales per Style: 48 pair
Think Real Estate not Product
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Tracking Average Inventory
Rolling InventoryUnits Cost Retail % foot % app % other
EOM March 6800 166000 314000 72% 18% 10%EOM April 7300 167000 309000 74% 15% 11%EOM May 3300 154000 289000 71% 19% 10%EOM June 6900 140000 260000 67% 18% 15%EOM July 7400 151000 285000 74% 15% 11%EOM August 7200 140000 265000 67% 17% 16%EOM September 7500 130000 246000 64% 19% 17%EOM October 6800 122000 232000 65% 17% 18%EOM November 6500 123000 235000 63% 20% 17%EOM December 5800 111000 215000 63% 16% 21%EOM January 6800 150000 279000 70% 15% 15%EOM February 6600 162000 305000 75% 12% 13%EOM March 6700 152000 287000 76% 12% 12%EOM April 6800 152000 286000 77% 9% 14%EOM May 6700 145000 275000 74% 13% 13%EOM June 8500 154000 291000 74% 11% 15%Avg Inv 7017 152500 287167 $213,461 $34,460 $39,246
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QUICK TIPS
Compare current inventory with ideal capacity
Step 1: Know your CapacityItems Per Total #
Columns Column ItemsShelf 1 10 15 150 Shelf 2 10 15 150 Shelf 3 10 15 150 Shelf 4 10 15 150 Shelf 5 10 15 150 Shelf 6 10 15 150 Shelf 7 10 15 150 Shelf 8 10 15 150 Shelf 9 10 15 150 Retail Floor 1 150 150 Total # of pieces 1,500
= Variables that can be changed
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QUICK TIPS
• Remember 3 months of Forward Cover
• The Rule of 4
• Justify Investment of niche categories like Trail, Spikes, and Walking
Step 2: Transfer Unit Capacity to $$ Capacity
Avg Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec TotalWHLSL $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00 $55.00% of Sales 6.9% 6.5% 7.8% 7.5% 8.8% 8.4% 8.2% 10.2% 8.3% 8.9% 7.2% 11.3% 100%
Pairs 468 450 528 504 492 612 498 534 432 678 414 390 6,000 OTB $25,740 $24,750 $29,040 $27,720 $27,060 $33,660 $27,390 $29,370 $23,760 $37,290 $22,770 $21,450 $330,000(based on Total Units & Avg Whsl)
Enter desired # of inventory turns throughout the year 4Total # units sold throughout yr 6,000
= Variables that can be changed
Specialty Soccer Profitability
Our Goal: To quickly find the highest
price at which a product will sell that will achieve our turn
expectation.
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1. Something is wrong with the product.
2. Something is wrong with the price.
3. Something is wrong with the timing.
4. Something is wrong with the visual presentation.
Why won’t it sell?
How to know
1. Get it in the Rotation
2. First markdown of 20%-25%
3. Hard markdown of 40%-50%
Step 3: Create Markdown Strategya) Enter sales discount
b) Enter markdown % over time
c) Enter estimated sell thru % based on prior history and trends
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(a) (b) (c)
Booked Grid Cost Net Retail Full retail Mgn% Disc% Mkdn% Sell Thru
# of weeks $247,500 $450,000 $450,000 45.0%
7 $165,825 $301,500 $301,500 45.0% 0.0% 0.0% 67.0%
3 $81,675 $111,375 $148,500 26.7% 25.0% 33.0%
3 $0 $0 $0 #DIV/0! 40.0% 0.0%
subtotal $247,500 $412,875 $450,000 40.1% 8.3% 100.0%
(a) (b) (c)
Fill in Grid Cost Net Retail Full retail Mgn% Disc% Mkdn% Sell Thru
# of weeks $82,500 $150,000 $150,000 45.0%
13 $82,500 $150,000 $150,000 45.0% 0.0% 0.0% 100.0%
0 $0 $0 $0 #DIV/0! 25.0% 0.0%
subtotal $82,500 $150,000 $150,000 45.0% 0.0% 100.0%
Total $330,000 $562,875 $600,000 41.4% 0.0% 6.2%
= Variables that can be changed
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The best buyer combines a great eye for product with a disciplined
flow and markdown strategy
QUICK TIPS
• Blend of art and science
• A well told bad story is better than a poorly told good story
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70% of your expenses go towards
Inventory and Payroll
Session #2: The ‘Kiss on the Forehead’ test
Gross Margin Return on Investment (GMROI)
Gross Margin Return on Employees (GMROE)
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Return on Inventory Investment
Annual GM$ 450,000
Average Inventory @ Cost $150,000
$3.00 ROI
Cost Analysis
• $2.00 is break even
• $3.00 is profitability
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Return on Employee Investment
Annual GM$ 450,000
Annual Payroll* $150,000
$3 per Employee*Does not include owner comp, taxes, or benefits
Cost Analysis
You owe your employees a healthy business
What instills company loyalty?
•Avoid the popular trap: Establishing Expectations
•Avoid the spectacular trap: Building a Team
•Avoid the power trap: Encouraging Authenticity
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The Non-negotiables 100% compliance
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Creating value in Specialty Experience
Sales Associates: It must be measured to work
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Expanding your contribution and value
Assistant Manager: Moving towards “Buy in”
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Bringing your talent & passion to the organization
Manager: Moving towards Stewardship
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Healthy Team Culture
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The first 60 days: Setting the Expectations
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3 to 5 months: Defining Progress
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6 to 9 months: Cultivating Talent
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1 year: Establishing a Team
Create
A
Rally Cry!
•Operation Race Weight
•Walk out Bonus
•Spoil the Customer
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Invulnerability
Artificial Harmony
Ambiguity
Low Standards
Status and Ego
The Five Dysfunctions of a TeamPatrick Lencioni
Cost Analysis
• Personal reputation v. Potential for greatness
• Short term consequences v. Long term vision
• Personality v. Character
Is this your job or your profession?
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First: A honed skill as distinguished from a mere skill
Second: It is an occupation pursued largely for others and not merely for one’s self
Third: It is an occupation where the amount of financial return is not the accepted measure of success
A profession is:
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Download these materials and other business tools at
www.karnanassociates.com
Karnan Associates, LLCA small business for small business
Business Breakthrough