1
00:00:00,000 --> 00:00:03,200
This episode comes with a companion free
download.

2
00:00:03,220 --> 00:00:06,369
If you head over to
resilientretailclub.com/numbers,

3
00:00:06,579 --> 00:00:09,229
you'll get the guide to the three key
numbers you need to know in your

4
00:00:09,229 --> 00:00:10,809
business and how to calculate them.

5
00:00:12,733 --> 00:00:17,033
Have you ever opened up your Shopify
dashboard looking for one answer and

6
00:00:17,033 --> 00:00:19,883
somehow ending up with 10 new questions?

7
00:00:20,443 --> 00:00:23,483
Retailers don't have a lack of data
problem.

8
00:00:23,563 --> 00:00:25,953
If anything, they have the opposite.

9
00:00:26,543 --> 00:00:30,403
They are drowning in information but
starving for clarity.

10
00:00:30,883 --> 00:00:35,453
I've worked with retailers who have
dashboards, apps, reports, spreadsheets,

11
00:00:35,463 --> 00:00:38,783
and notifications everywhere letting them
know every single time they make

12
00:00:38,783 --> 00:00:43,213
a sale, yet they still can't answer some
very basic questions like, "Am

13
00:00:43,213 --> 00:00:45,463
I making money?" "Am I on track?"

14
00:00:45,563 --> 00:00:49,603
and "Is my stock healthy?" Today, I want
to talk about cutting through

15
00:00:49,603 --> 00:00:53,523
the noise and focusing on the handful of
numbers that actually tell you

16
00:00:53,523 --> 00:00:55,013
whether your business is healthy

17
00:01:09,874 --> 00:01:13,794
Many business owners think that the
solution is another app, another

18
00:01:13,794 --> 00:01:17,634
report, another dashboard, and certainly
we are all being sold

19
00:01:17,874 --> 00:01:20,104
more AI tools every single day.

20
00:01:20,184 --> 00:01:24,044
But the reality is that more information
doesn't automatically

21
00:01:24,044 --> 00:01:25,774
lead to better decisions.

22
00:01:25,814 --> 00:01:30,184
In fact, too many viewpoints can actually
make decision-making harder.

23
00:01:30,404 --> 00:01:34,094
One of the things that I quite often see
is founders who are

24
00:01:34,424 --> 00:01:36,974
bamboozled by an excess of data.

25
00:01:37,004 --> 00:01:40,844
They have got different tools that are
telling them different things,

26
00:01:40,914 --> 00:01:44,584
and the big question that's in their mind
is really, "So what?

27
00:01:44,594 --> 00:01:48,504
So now I know all of this information, I
can see all of these different things,

28
00:01:48,774 --> 00:01:52,714
all of these different elements, and
ultimately, I still don't know whether

29
00:01:52,714 --> 00:01:56,864
or not I'm actually making any money."
They might be looking at Shopify reports,

30
00:01:56,884 --> 00:02:02,704
Google Analytics, Klaviyo reports, Meta Ad
reporting, accounting software.

31
00:02:03,014 --> 00:02:06,834
They might be running third-party analytic
tools, for example, endless

32
00:02:06,834 --> 00:02:12,894
spreadsheets, looking at heat maps of
their website, or getting notifications

33
00:02:12,964 --> 00:02:16,754
or insights from all of the different
tools that have added AI into it, and

34
00:02:16,754 --> 00:02:21,354
again, still not really sure what to be
actually doing with it, and which

35
00:02:21,354 --> 00:02:24,094
numbers they should be focusing on most.

36
00:02:24,434 --> 00:02:28,254
Many people will ask me, "When it comes to
the… doing an end of month review

37
00:02:28,254 --> 00:02:34,464
or an end of quarter review, what should I
actually be looking at?" And the

38
00:02:34,464 --> 00:02:39,134
goal here, really, I believe, is not to
try and collect more information.

39
00:02:39,384 --> 00:02:43,304
The goal is really to try and gain some
clarity.

40
00:02:44,144 --> 00:02:48,654
The first thing that I would suggest that
you do is to actually simplify the amount

41
00:02:48,674 --> 00:02:50,684
of tools and tech that you are using.

42
00:02:50,694 --> 00:02:54,944
There's such a thing as tech creep, where
you sign up for something, and then all

43
00:02:54,954 --> 00:02:59,164
of a sudden you've actually paid for all
of these different tools, these plugins,

44
00:02:59,174 --> 00:03:03,554
these apps, and you might not even be
using them, or you may be looking at them,

45
00:03:03,554 --> 00:03:05,694
but still not really having your answers.

46
00:03:06,124 --> 00:03:09,374
So I definitely recommend doing a bit of
housekeeping.

47
00:03:09,764 --> 00:03:15,674
If you have a tool or any piece of tool or
software that you are using, then ev-

48
00:03:15,674 --> 00:03:19,534
for every single one that you're paying
for, I would suggest

49
00:03:19,534 --> 00:03:22,794
that you ask the following: "Is this
giving me information that I can't get

50
00:03:22,964 --> 00:03:28,284
elsewhere? Am I actually looking at it
regularly? And am I doing anything with

51
00:03:28,294 --> 00:03:30,494
the information that it's providing?"

52
00:03:30,824 --> 00:03:34,144
So those three questions will help steer
you and help you look through.

53
00:03:34,524 --> 00:03:39,064
If you've forgotten which ones you've
signed up for, which no, uh,

54
00:03:39,264 --> 00:03:43,264
judgment from me, I, I think it happens to
all of us, definitely take a look and

55
00:03:43,264 --> 00:03:47,424
run through all of your direct debits or
your recurring payments in your business

56
00:03:47,454 --> 00:03:49,564
bank and just ask yourself, "What is this?

57
00:03:50,234 --> 00:03:51,274
Am I paying for it?

58
00:03:51,274 --> 00:03:57,054
What do I even need it for?" Because, as I
said, the danger is that too much

59
00:03:57,054 --> 00:04:01,374
information can just cause overwhelm, and
if you're not really using it, um,

60
00:04:01,384 --> 00:04:02,964
it could just be adding to the noise.

61
00:04:03,167 --> 00:04:06,467
The truth is that although we are being
bombarded all the time by AI and

62
00:04:06,467 --> 00:04:10,257
it can feel really overwhelming, it does
also create some real opportunities.

63
00:04:10,547 --> 00:04:15,847
So for example, Shopify Sidekick is a
great AI tool that is allowing

64
00:04:15,847 --> 00:04:20,797
people to actually ask using what they
call natural language reporting.

65
00:04:20,807 --> 00:04:24,377
So natural language reporting basically
means that you can ask it

66
00:04:24,427 --> 00:04:26,387
a question in a conversational way.

67
00:04:26,817 --> 00:04:31,047
Prior to Sidekick coming in and having
these capabilities, you would've had

68
00:04:31,047 --> 00:04:33,707
to, if you wanted to know what your best
sellers were, you would've had

69
00:04:33,707 --> 00:04:39,697
to run your sales by product picked the
time period that you wanted, and

70
00:04:40,387 --> 00:04:43,687
basically run the report and then saved it
in the version that you wanted it,

71
00:04:43,697 --> 00:04:46,327
made sure it was showing you all the bits
and pieces of information that

72
00:04:46,327 --> 00:04:48,577
you wanted, and then saved that report.

73
00:04:49,647 --> 00:04:53,807
They actually, even before that, Shopify,
they had very fixed reports

74
00:04:53,807 --> 00:04:55,017
that you couldn't really amend.

75
00:04:55,277 --> 00:04:58,647
They then changed it last year to be much
more flexible, but

76
00:04:58,887 --> 00:05:00,347
maybe slightly harder to use.

77
00:05:00,717 --> 00:05:05,297
But now with Sidekick, you can actually
just go in and ask the AI Sidekick,

78
00:05:06,027 --> 00:05:07,747
"What were my best sellers last month?

79
00:05:07,757 --> 00:05:09,897
What was my sales margin last month?

80
00:05:09,937 --> 00:05:14,157
Which products are underperforming?" So
instead of building complex reports

81
00:05:14,157 --> 00:05:17,587
where you have to get a lot of different
pieces of information, you can now

82
00:05:17,627 --> 00:05:22,897
actually use Sidekick or other AI tools
for, as I said, that natural language,

83
00:05:22,897 --> 00:05:25,867
so you can have a conversation with it,
ask it the questions you might

84
00:05:25,897 --> 00:05:28,727
otherwise have had to answer yourself.

85
00:05:29,817 --> 00:05:34,537
So this also means that if even in the
last six months things have changed,

86
00:05:34,557 --> 00:05:39,097
there may be tools and subscriptions that
you'd signed up for last year that now

87
00:05:39,127 --> 00:05:43,217
they're duplicative of some of the AI
capabilities within the tools that you're

88
00:05:43,217 --> 00:05:45,147
already using on a day-to-day basis.

89
00:05:45,497 --> 00:05:49,247
So again, I would really recommend that
you run through and have a look at what

90
00:05:49,247 --> 00:05:53,207
you're paying for and make sure that even
in the last six months, has this changed?

91
00:05:53,237 --> 00:05:53,897
Has it shifted?

92
00:05:53,927 --> 00:05:55,647
Is this something that you still need?

93
00:05:55,687 --> 00:06:00,837
Because a lot of these capabilities have
replaced the need for more specific tools.

94
00:06:01,497 --> 00:06:05,157
Are there any that you could cancel
tomorrow without it changing or

95
00:06:05,157 --> 00:06:06,427
affecting your decision-making?

96
00:06:07,767 --> 00:06:12,987
So in terms of what you actually need,
I've certainly seen people running their

97
00:06:12,987 --> 00:06:17,907
businesses off their accounting software,
their POS system, whether that's Shopify

98
00:06:17,907 --> 00:06:21,827
or something else, and a spreadsheet,
which I'll come onto more later.

99
00:06:21,837 --> 00:06:25,027
So it doesn't always have to be
complicated and fancy for

100
00:06:25,027 --> 00:06:28,077
you to understand all of the information
in your business.

101
00:06:28,097 --> 00:06:31,477
In fact, I would say the bigger issue
tends to be not that you don't have the

102
00:06:31,477 --> 00:06:35,457
right tool for the reporting, but that the
data that's in your system is not as

103
00:06:35,457 --> 00:06:37,407
detailed as it could be to start off with.

104
00:06:38,457 --> 00:06:43,217
So moving onto then, what questions are we
actually asking to try and

105
00:06:43,217 --> 00:06:44,807
define the health of your store?

106
00:06:45,217 --> 00:06:48,787
The first question that I recommend that
you ask yourself on a regular

107
00:06:48,787 --> 00:06:53,537
basis is, am I making enough money every
time I make a sale?

108
00:06:54,337 --> 00:06:58,327
In other words, it's not always about
revenue, it's about your profit.

109
00:06:58,357 --> 00:07:02,147
Your sales margin, the difference between
what you buy something for

110
00:07:02,147 --> 00:07:05,987
and what you sell it for, is the absolute
foundation of your business.

111
00:07:06,237 --> 00:07:09,857
It's the engine, the profit engine, that
drives everything else.

112
00:07:09,877 --> 00:07:13,447
Everything else that you pay for in your
business has to be covered by

113
00:07:13,447 --> 00:07:16,827
the difference between what you buy
something for and what you sell it for.

114
00:07:17,487 --> 00:07:21,187
So you need to understand your monthly
sales margin.

115
00:07:21,217 --> 00:07:24,207
This is one of the most important numbers
for you to look at.

116
00:07:24,657 --> 00:07:27,427
So your monthly sales margin is expressed
as a percentage.

117
00:07:27,427 --> 00:07:31,417
So for example, if you are VAT registered
and you sell something

118
00:07:31,427 --> 00:07:35,517
for £12, if you take the VAT off, then
that's £10 excluding VAT.

119
00:07:36,055 --> 00:07:41,525
If you're paying £5 for that, then you are
paying £5 and you have £5 profit.

120
00:07:41,895 --> 00:07:47,925
So that is five divided by 10 your price
without tax, and that is a 50% margin.

121
00:07:48,455 --> 00:07:53,735
So you want to be really clear on what
that looks like for your whole business.

122
00:07:53,765 --> 00:07:56,815
And the way that you would do that is you
would look in your… You would

123
00:07:56,815 --> 00:08:01,165
look at the sales that you took in the
last month without tax, and you

124
00:08:01,165 --> 00:08:04,995
would take off all of the product costs
associated with those sales.

125
00:08:05,595 --> 00:08:07,805
Now, there are various different ways of
doing this.

126
00:08:07,815 --> 00:08:12,005
If you have got all of your cost prices
loaded into Shopify, for example, if

127
00:08:12,005 --> 00:08:15,545
you're using Shopify, you are able to ask
the sidekick, "Tell me what my

128
00:08:15,545 --> 00:08:19,105
sales margin was last month," and it
should give you an accurate answer.

129
00:08:19,515 --> 00:08:23,495
For some people, it will be a question of
looking at their sales in their accounting

130
00:08:23,495 --> 00:08:27,525
software and then comparing that to the
COGS, or the cost of goods sold.

131
00:08:27,765 --> 00:08:30,565
Now, the only issue with that is that
depending on the way that your

132
00:08:30,565 --> 00:08:34,165
accounting software is set up, the cost of
goods sold that you're seeing may not

133
00:08:34,475 --> 00:08:38,055
actually reflect the cost of goods sold
for the products you sold in that month.

134
00:08:38,065 --> 00:08:41,975
It may just be that you spent more money
on stock that month, and therefore, your

135
00:08:41,985 --> 00:08:43,575
margin ends up looking a little funny.

136
00:08:43,595 --> 00:08:46,405
So if you're not sure how that cost of
goods sold is calculated,

137
00:08:46,665 --> 00:08:48,055
check that with your accountant.

138
00:08:48,545 --> 00:08:51,815
But for many people, the best place for
them to get this number is to

139
00:08:52,165 --> 00:08:56,235
make sure that they've put all of their
cost prices into their point of

140
00:08:56,235 --> 00:09:00,205
sale system, and then they are able to
query the total sales that they

141
00:09:00,205 --> 00:09:02,805
took minus the cost of those sales.

142
00:09:02,805 --> 00:09:06,425
And that is a very, very important number
for you to have a handle on.

143
00:09:06,705 --> 00:09:11,125
Because if your margin is deteriorating or
it's, you're not really getting what

144
00:09:11,125 --> 00:09:15,225
you want in terms of margin, then your
business becomes harder and harder to run.

145
00:09:15,855 --> 00:09:17,895
So what do you do if it's not very high?

146
00:09:17,905 --> 00:09:22,275
Well, first off, for most businesses that
buy in stock from other people,

147
00:09:22,275 --> 00:09:26,765
you would expect your, your sales margin
each month to be around 50%.

148
00:09:26,785 --> 00:09:29,005
So that's what, your, your kind of
starting point.

149
00:09:29,435 --> 00:09:33,705
Now, if it's not a 50%, it could be eroded
by things like discounts,

150
00:09:33,755 --> 00:09:36,045
promotions, clearance activities.

151
00:09:36,055 --> 00:09:37,495
Sometimes that's just the way it is.

152
00:09:37,495 --> 00:09:41,235
If you're running a big sale, you're
likely to end up in a situation where your

153
00:09:41,235 --> 00:09:43,825
sales margin is lower than 50% that month.

154
00:09:44,205 --> 00:09:48,365
It could also be that your supplier costs
have gone up and you have not increased

155
00:09:48,555 --> 00:09:53,385
your prices accordingly, and therefore,
your margin is getting squeezed.

156
00:09:53,755 --> 00:09:56,345
It's okay for your margin to dip
temporarily.

157
00:09:56,565 --> 00:10:00,445
You may have one month of the year where
you really push into sales that

158
00:10:00,445 --> 00:10:02,535
your margin is lower than normal.

159
00:10:02,795 --> 00:10:07,785
But what's not good is if it is
continually looking low and you're

160
00:10:07,785 --> 00:10:09,355
not doing anything to address it.

161
00:10:09,365 --> 00:10:12,395
So make yourself check it once a month.

162
00:10:12,755 --> 00:10:16,565
If you don't have all your cost prices in,
yes, it is a, an admin

163
00:10:16,575 --> 00:10:20,055
job to get them all loaded in, but it will
bear a lot of fruit.

164
00:10:20,075 --> 00:10:23,095
It will really help you understand a lot
more about your business.

165
00:10:23,675 --> 00:10:26,225
And make sure that you're checking your
sales margin once a month.

166
00:10:26,265 --> 00:10:27,195
Is it stable?

167
00:10:27,195 --> 00:10:28,115
Is it improving?

168
00:10:28,165 --> 00:10:29,295
Or is it declining?

169
00:10:30,189 --> 00:10:32,809
So you wanna make sure that you're
checking that.

170
00:10:32,869 --> 00:10:36,069
And again, you wanna make sure that you're
doing things to

171
00:10:36,069 --> 00:10:37,829
try and improve your margin.

172
00:10:37,829 --> 00:10:42,619
So for example, reviewing your pricing or
reviewing how many discounts that

173
00:10:42,619 --> 00:10:46,339
you're giving out or reviewing how much of
your sales, how many of your

174
00:10:46,339 --> 00:10:52,439
sales are actually coming from full price
sales versus sales on a discount.

175
00:10:52,999 --> 00:10:56,159
And all of those things will help you keep
an eye on that sales margin.

176
00:10:56,159 --> 00:10:59,639
But that, for me, is the number one number
that you should be looking

177
00:10:59,639 --> 00:11:01,669
at each month in your business

178
00:11:02,989 --> 00:11:06,909
The second question that I would recommend
that you ask yourself is are

179
00:11:06,909 --> 00:11:09,019
you selling enough to cover your costs?

180
00:11:09,289 --> 00:11:14,469
This is known as a breakeven analysis, and
it's one of the most

181
00:11:14,629 --> 00:11:17,889
underutilised or underrated numbers in
retail.

182
00:11:17,889 --> 00:11:20,589
Your breakeven point basically tells you
how much profit you

183
00:11:20,589 --> 00:11:22,079
need to cover your fixed costs.

184
00:11:22,379 --> 00:11:24,339
We do this with every client that we have.

185
00:11:24,349 --> 00:11:29,419
When we work with clients in Stock Doctor and Retail by
Design, we ask people to complete this

186
00:11:29,419 --> 00:11:34,549
breakeven analysis, and we review it
because it is so illustrative in terms

187
00:11:34,549 --> 00:11:36,189
of what's going on in the business.

188
00:11:36,199 --> 00:11:40,719
It helps us understand is the business
profitable, is the business… Or

189
00:11:40,859 --> 00:11:44,129
what number does the business need to be
at to be profitable?

190
00:11:44,149 --> 00:11:46,039
And it answers a lot of questions.

191
00:11:46,369 --> 00:11:49,099
So if you've been feeling unsure about how
things are going in

192
00:11:49,099 --> 00:11:52,779
your business, then do definitely check
out your breakeven number.

193
00:11:53,559 --> 00:11:56,859
In my book, Tame Your Tiger: How to Stop
Your Product Business Eating You Alive, I

194
00:11:57,169 --> 00:11:59,299
go into detail in how to calculate this.

195
00:11:59,299 --> 00:12:02,939
But effectively, what it's doing is it's
looking at based on an average

196
00:12:02,959 --> 00:12:07,299
monthly sales, and your average monthly
costs, and your average monthly

197
00:12:07,329 --> 00:12:11,619
profit margin, are you making enough sales
to cover your fixed costs?

198
00:12:12,419 --> 00:12:17,559
So without your breakeven analysis, you
don't necessarily have a really clear

199
00:12:17,559 --> 00:12:19,119
idea of what your sales need to be.

200
00:12:19,459 --> 00:12:21,079
Sales can feel a bit random.

201
00:12:21,079 --> 00:12:24,579
So if you have a 10,000 pound sales month,
is that good, is that

202
00:12:24,579 --> 00:12:27,049
fantastic, or is it really terrible?

203
00:12:27,089 --> 00:12:30,049
The other thing I will say is that
sometimes when I'm working with a

204
00:12:30,059 --> 00:12:32,239
client, we'll run the breakeven analysis.

205
00:12:32,279 --> 00:12:33,909
Well, this happens fairly commonly.

206
00:12:34,379 --> 00:12:36,859
And actually, the business is nicely
profitable.

207
00:12:36,859 --> 00:12:41,469
There's a nice buffer, and it should
really be something that feels

208
00:12:41,469 --> 00:12:43,179
quite comfortable for the owner.

209
00:12:43,219 --> 00:12:47,169
But what they are doing is they're
actually not recognising that the

210
00:12:47,169 --> 00:12:48,799
business is quite comfortably profitable.

211
00:12:49,039 --> 00:12:51,519
They're still really stressing because
they don't have that visibility.

212
00:12:51,519 --> 00:12:54,309
They don't know that they definitely have
got all of their

213
00:12:54,359 --> 00:12:56,699
costs covered by the sales.

214
00:12:57,989 --> 00:13:00,619
So without your breakeven, you don't know
whether you're on track.

215
00:13:00,629 --> 00:13:01,939
You don't know whether you're falling
short.

216
00:13:02,379 --> 00:13:05,219
And you also can't really see if any new
costs that you want

217
00:13:05,229 --> 00:13:06,699
to bring in are affordable.

218
00:13:07,099 --> 00:13:12,409
So for example, one of my favourite uses
for a breakeven analysis is

219
00:13:12,409 --> 00:13:13,789
when we're able to say, "Okay.

220
00:13:13,789 --> 00:13:15,709
Well, I want to bring in extra cost.

221
00:13:15,719 --> 00:13:18,139
I want to bring in this person to help
with the business.

222
00:13:18,159 --> 00:13:22,409
I want to start paying for advertising
this way." And without

223
00:13:22,429 --> 00:13:26,239
the breakeven analysis, we can't see what
the sales increase needs to

224
00:13:26,239 --> 00:13:28,279
be to justify that additional cost.

225
00:13:28,839 --> 00:13:31,649
So having it set up is really, really
helpful.

226
00:13:31,659 --> 00:13:34,759
And then once a month you can have a look
and see how does that

227
00:13:34,759 --> 00:13:36,289
compare to what I actually did.

228
00:13:36,349 --> 00:13:38,359
Did I do the sales that I needed to do?

229
00:13:38,459 --> 00:13:40,289
Was my profit margin where it needed to
be?

230
00:13:40,659 --> 00:13:43,809
And have, how much have I actually spent
compared to what

231
00:13:43,809 --> 00:13:45,229
I think my average costs are?

232
00:13:45,529 --> 00:13:49,869
And therefore, am I working towards a
profitable business model or not?

233
00:13:51,853 --> 00:13:54,223
Profit and loss statements exist.

234
00:13:54,323 --> 00:13:58,443
Profit and loss is something that
you can also look at on a month-by-month

235
00:13:58,443 --> 00:14:00,653
basis inside your accounting software.

236
00:14:01,073 --> 00:14:03,593
This will give you somewhat of a similar
idea whether or not you made

237
00:14:03,593 --> 00:14:05,323
a profit or loss.

238
00:14:05,833 --> 00:14:08,963
Again, the only thing that gets a bit
tricky with your profit and loss inside

239
00:14:08,963 --> 00:14:13,043
your accounting software is when you have
big fluctuations in when you're

240
00:14:13,043 --> 00:14:17,233
spending money on stock, and that can
throw it off and make it hard for

241
00:14:17,233 --> 00:14:20,883
you to understand whether the fundamental
business model is profitable or not.

242
00:14:21,323 --> 00:14:25,653
So therefore, the breakeven analysis,
which assumes a sort of even amount

243
00:14:25,653 --> 00:14:29,123
of stock purchase throughout the year,
which I know is not realistic,

244
00:14:29,123 --> 00:14:30,613
but it's a good diagnostic tool.

245
00:14:31,423 --> 00:14:34,683
That is a slightly different thing than a
profit and loss statement, and it can

246
00:14:34,683 --> 00:14:38,343
help you understand fundamentally if the
framework of the business is healthy.

247
00:14:40,103 --> 00:14:43,133
And then the third question that I would
recommend that you ask

248
00:14:43,133 --> 00:14:47,073
yourself on a regular basis is, is your
stock turning fast enough?

249
00:14:47,623 --> 00:14:51,023
So this, for me, is one of the most
important numbers

250
00:14:51,023 --> 00:14:52,133
that you need to look at.

251
00:14:52,163 --> 00:14:56,343
And again, if you're not currently keeping
records of your stock, then

252
00:14:56,343 --> 00:14:59,653
I highly recommend that you start because
it makes it so much easier

253
00:14:59,653 --> 00:15:00,963
for you to keep an eye on this.

254
00:15:02,043 --> 00:15:03,783
So stock is cash.

255
00:15:03,853 --> 00:15:04,693
Cash is stock.

256
00:15:04,783 --> 00:15:08,923
If you think about every product in your
business as a 10 pound note, if it's a

257
00:15:08,923 --> 00:15:12,753
10 pound product, think of it as a 10
pound note, you can really clearly see

258
00:15:12,753 --> 00:15:14,543
where the money is in your business.

259
00:15:14,603 --> 00:15:18,383
And the longer it sits on your shelves,
then the longer your money is tied up.

260
00:15:19,053 --> 00:15:22,693
So stock turn matters because the faster
your stock turns,

261
00:15:22,693 --> 00:15:24,103
the healthier your cash flow is.

262
00:15:24,443 --> 00:15:27,593
And the slower the turn, the more pressure
is on your cash.

263
00:15:27,923 --> 00:15:30,523
So if this is not something that you're
watching, you can sleepwalk

264
00:15:30,853 --> 00:15:32,973
yourself into a cash flow problem.

265
00:15:33,343 --> 00:15:36,983
A simple metric to measure is how much
stock do I have, and how

266
00:15:36,983 --> 00:15:38,943
does that compare to my sales?

267
00:15:39,583 --> 00:15:41,813
The formula that I like to look at on a
monthly basis

268
00:15:41,833 --> 00:15:43,073
is the number of weeks cover.

269
00:15:43,283 --> 00:15:47,693
So weeks cover is your stock value divided
by your average weekly sales.

270
00:15:47,933 --> 00:15:53,743
So for example, if you have £150,000 worth
of stock and your average

271
00:15:54,033 --> 00:15:59,083
expected weekly sales for the next 12
weeks is around £10,000 a week, then

272
00:15:59,083 --> 00:16:01,773
you have got 15 weeks worth of stock.

273
00:16:02,523 --> 00:16:06,173
Now, this is a theoretical number because
we all know it's not exactly like your

274
00:16:06,173 --> 00:16:09,253
stock would last for 15 weeks because
you'd be selling down to nothing.

275
00:16:09,553 --> 00:16:12,943
But it's a really good yardstick for you
to measure and to understand how

276
00:16:12,943 --> 00:16:16,493
much stock you've got in your business and
whether or not it's going to be

277
00:16:16,853 --> 00:16:19,573
Whether or not it's growing and therefore
eating up more cash, or

278
00:16:19,573 --> 00:16:22,993
whether or not it's decreasing and any
stock clearance activities that you

279
00:16:22,993 --> 00:16:25,583
are doing is act- are actually working.

280
00:16:26,253 --> 00:16:29,863
So most retailers will know what their
sales are, but they don't necessarily

281
00:16:29,863 --> 00:16:31,903
know what their stock number is.

282
00:16:31,943 --> 00:16:36,993
And that can cause stress because they
can't see if they are, in fact,

283
00:16:36,993 --> 00:16:40,583
keeping an eye on turning their stock
quickly or whether or not

284
00:16:40,643 --> 00:16:42,953
they are just letting it pile up.

285
00:16:43,103 --> 00:16:46,083
So if you don't have a stock plan, then
you can start by simply

286
00:16:46,083 --> 00:16:50,443
monitoring your stock levels every month
and working out is my stock

287
00:16:50,773 --> 00:16:52,813
cover going up or is it going down?

288
00:16:53,063 --> 00:16:55,583
It's another reason why it's a great thing
to have a sales plan because

289
00:16:55,583 --> 00:16:59,483
if you have a sales plan, you'll know what
your forecasted average weekly

290
00:16:59,483 --> 00:17:01,013
sales for the next 12 weeks are.

291
00:17:01,043 --> 00:17:04,173
If you don't have a sales plan, you're
gonna have to estimate that number.

292
00:17:04,423 --> 00:17:09,033
So I would set it up, set up your sales
plan, work out each month what your

293
00:17:09,203 --> 00:17:13,163
average weekly sales for the next 12 weeks
coming up is, and then use that

294
00:17:13,163 --> 00:17:16,683
to calculate how much, how many weeks
worth of stock that you have got.

295
00:17:17,083 --> 00:17:20,183
And then that is one number that you can
look at each month and ask yourself,

296
00:17:20,213 --> 00:17:21,913
is this going up or is it going down?

297
00:17:22,343 --> 00:17:26,653
Now, you will typically carry fewer weeks
worth of stock in peak times.

298
00:17:26,653 --> 00:17:30,283
So when you're in the run-up to Christmas,
you would expect your number of weeks of

299
00:17:30,283 --> 00:17:34,303
stock to be lower because you're expecting
a big sales increase, for example.

300
00:17:34,643 --> 00:17:39,653
And then in January or February, then your
stock will mo- most likely be turning

301
00:17:39,653 --> 00:17:41,603
slower than it is at the peak times.

302
00:17:41,843 --> 00:17:46,193
However, you don't want it to get too out
of hand, and you wanna make sure it's not

303
00:17:46,203 --> 00:17:48,333
increasing and creeping up year on year.

304
00:17:48,333 --> 00:17:53,753
So all of those reasons are the perfect
excuse to take a look once a month at

305
00:17:53,763 --> 00:17:56,903
how much stock that you've got and to make
sure that you have a record of

306
00:17:56,903 --> 00:18:02,913
that So my slightly old fashioned view is
I still love a spreadsheet because

307
00:18:02,923 --> 00:18:06,173
it's one place that, that you can record
these numbers, it's one version of the

308
00:18:06,173 --> 00:18:08,223
truth, and it's easy to review trends.

309
00:18:08,233 --> 00:18:12,973
Yes, you can calculate a lot of this
information by asking Sidekick,

310
00:18:12,983 --> 00:18:17,583
you can get reports run, you can get
plug-ins and tools that will

311
00:18:17,593 --> 00:18:18,953
look at some of this data for you.

312
00:18:19,433 --> 00:18:22,793
But if each week you note down in a
spreadsheet what your weekly sales

313
00:18:22,843 --> 00:18:26,593
are, and each month you note down what
your sales margin is, your sales

314
00:18:26,603 --> 00:18:30,023
versus your target, your sales versus last
year, the stock value that you're

315
00:18:30,023 --> 00:18:33,373
currently holding, and the number of weeks
cover, then you have got one

316
00:18:33,373 --> 00:18:37,813
place that you can very quickly see, in
seconds, how the business is doing.

317
00:18:38,303 --> 00:18:41,643
So make sure that you're building
something that is for you.

318
00:18:41,643 --> 00:18:42,433
This is for you.

319
00:18:42,433 --> 00:18:43,473
It's not for an investor.

320
00:18:43,493 --> 00:18:45,373
It can be extremely simple.

321
00:18:45,373 --> 00:18:48,903
In fact, I would much rather that you
wrote something down on a Post-It note

322
00:18:48,943 --> 00:18:53,343
and stuck it on your screen than you went
ahead and created something that

323
00:18:53,343 --> 00:18:58,713
was really complicated, was hugely
difficult to keep updated, and also just

324
00:18:58,713 --> 00:19:01,623
didn't give you that much information, or
something that just put you off

325
00:19:01,653 --> 00:19:03,163
ever doing it 'cause it took too long.

326
00:19:03,403 --> 00:19:05,683
You want a dashboard that helps you make
decisions.

327
00:19:06,023 --> 00:19:07,373
Do I need to improve my margin?

328
00:19:07,383 --> 00:19:08,803
Do I need to spend less on stock?

329
00:19:08,803 --> 00:19:11,013
Do I need to take action to speed up my
stock?

330
00:19:11,453 --> 00:19:14,113
How am I doing against my breakeven
analysis?

331
00:19:14,143 --> 00:19:17,323
What do I need to do to keep moving this
business towards profit?

332
00:19:17,593 --> 00:19:22,033
You don't need to drown in data, you just
need to answer these three core questions.

333
00:19:22,433 --> 00:19:24,363
Am I making enough profit on every sale?

334
00:19:24,403 --> 00:19:26,313
Am I selling enough to cover my costs?

335
00:19:26,553 --> 00:19:28,763
And is my stock turning enough?

336
00:19:29,443 --> 00:19:35,023
So don't forget, keeping it simple can
really help you take action, as opposed

337
00:19:35,033 --> 00:19:39,133
to making it too complicated and then just
getting stuck in the complexity.

338
00:19:39,903 --> 00:19:44,353
So why not take 30 minutes, go through all
of the reporting tools that you're paying

339
00:19:44,353 --> 00:19:49,033
for, work out which you actually need, and
then create one simple place to track

340
00:19:49,103 --> 00:19:53,943
those three key stats, because clarity
beats complexity every single time.

341
00:19:56,941 --> 00:20:00,531
If you want to know how to get a handle on
the three key numbers that you need

342
00:20:00,531 --> 00:20:05,921
to know in your business, then head over
to resilientretailclub.com/numbers and

343
00:20:05,931 --> 00:20:10,111
download my free guide of the key numbers
that you need to know and how to get them.

344
00:20:11,061 --> 00:20:11,971
Thanks for listening.

345
00:20:12,411 --> 00:20:14,581
Why not take a moment to rate and review
the podcast?

346
00:20:15,031 --> 00:20:19,091
You can rate it inside Apple Podcasts and
also inside Spotify.

347
00:20:19,461 --> 00:20:22,021
And of course, if you like, follow, or
subscribe, you'll be the first

348
00:20:22,021 --> 00:20:25,201
to know about each new episode when it
comes out on a Thursday morning.

349
00:20:25,311 --> 00:20:26,061
See you next week