Pricing

1. Do you figure markup as a percentage of retail selling price rather than as a percentage of cost?

Using selling price, you can more easily compare your markup with that of other stores and with your own sore expenses (which usually are expressed as a percentage of retail sales). Because most of the difference between cost and selling price represents store expense, it is preferable to express markup as a percent of the retail price. A markup goal is arrived by balancing such factors as sales, markdown, expense, and profit objectives. deviations should require your approval. You should set a markup percentage goal not only for your store, but also for each merchandise department.

2. Do you set price lines or price zones?

Setting a limited number of price lines give you good assortments at those price levels. By concentrating at these levels you will minimize your inventory investment. Using price lines also helps you to aim all merchandise categories at specific groups of customers. Price lines should be determined only after you have studied the income levels and buying desires of your customers. Lines should be revised as these factors change.

3. Do the prices you set provide adequate markups within the limits of competition?

Carelessly set prices often throw away markup without appreciable advantage to your customers.

4. Do you give as much consideration to the adequacy of your dollar markup as to that of your percentage markup?

Setting a lower initial markup may bring you enough added sales to yield a larger total profit, but you must be careful that such action does not disturb the public image of your store.

5. In retail pricing of new items and in evaluating their cost quotations, are you guided by what you think the typical customer will consider good value?

The following is a good way to proceed: estimate the retail price for an item that you believe your customers will regard as good value, from this subtract the markup you have set for similar goods; the amount remaining represents a reasonable cost to you for the item.

6. Do you practice the technique of averaging markup rather than aiming at the same markup percentage throughout your store?

Sound pricing indicates that you should take larger markups on goods whose risk and handling costs are high in order to offset the low markups you would take on competitive merchandise. The pricing mix, by which you achieve an average desired markup, is more important than the markup on individual items.

7. Do you avoid selling new and regular merchandise as loss leaders (items sold at less than cost)?

A small store gains nothing when it becomes involved in a price war. It is better to drop out of such a contest altogether than to offer regular goods at a loss. You may lose the patronage of some bargain seekers; but if you have carefully built your store's reputation, you will not lose the customers who are important to you.

8. Do you keep a record of all your markdowns, and do you analyze them by cause?

Analysis of markdowns by cause will help you to eliminate or reduce major causes, such as reordering too late in the season or holding too many special sales.

9. When you have clearance merchandise, does your first markdown normally move a substantial portion of the stock?

Frequently, two or even three markdowns are required to dispose of an entire lot of clearance merchandise. If you sell out everything at the first markdown, you may have taken an unnecessarily large loss. On the other hand, if you take a very small markdown that moves only a small part of the goods, you are likely to carry the goods into the next season when there is very little demand for them.

10. Before you mark down goods for clearance, do you consider alternate or supplementary ways of moving them - such as special displays, repackaging, or including them in a deal?

In stores handling fashion and seasonal goods, clearance markdowns are one of the heaviest costs. Ingenuity and imagination often make it possible to move goods without markdowns; using other promotion devices allows you to take a smaller markdown.

Advertising And Sales Promotion

1. Do you frequently supplement your routine day-by-day selling operations with special promotions?

Although your customers expect you to maintain full assortments of your regular lines, they also expect you to offer timely specials that are unusual and dramatic. The number and timing of these events should be geared to the type of customer you are trying to attract.

2. Do you advertise consistently in at least one appropriate medium: newspapers, direct mail, handbills, local television or radio?

Even if your store is small, you should not depend wholly on passing traffic and satisfied customers' recommendations. With a little effort and planning, you can find inexpensive yet effective ways to advertise and reach a larger public.

3. Do you plan your advertising at least 4 weeks ahead?

If you plan ahead, you can make better purchases of timely goods; you will have the goods when they are needed; and your advertisements will do a more effective selling job.

4. Do you approve all ads before they are released, reviewing their content and making sure that the goods mentioned will be ready for selling?

You or your immediate assistant should approve all ads before they are released. Carelessness and error not only dissipate your investment in the ad but will lead to customer dissatisfaction.

5. Do you consistently choose items for advertising that are timely, have exceptional value or exclusive features, and help to build your store image?

If the items you advertise do not have at least some of these qualities, your advertising is wasteful and detracts from your store's personality.

6. Do you follow the ads of stores in larger cities catering to customers similar to your own in order to find outstanding items to advertise?

Some small merchants have used this technique very successfully. It often involves making special purchases of goods for their advertising appeal.

Why do some Business managers reach the gain target more frequently than others? They do it because they keep their performance
pointed in this direction - management of profit earning. They never lose sight of the goal - to complete the year with a profit.

This guide Gives suggestions which should enable an owner-manager to zero on profit earning. It points out that you have to keep
informed, make timely decisions, and take action. In effect you must control the activities of your organization instead of being
controlled by them.

Topnotch Performance in golfing, shootingfishing requires understanding, practice, and endurance.

Similarly, in Small businesses, year-end profit comes to the owner-manager who tries for topnotch performance. You achieve profit
making goals by understanding your operation, by practicing the art of earning timely, balanced judgments and by controlling the
company's actions.

Adapt the Suggestions in this manual to your circumstance. They ought to help you predict the shots to keep your business headed
in the right direction - toward profit earning.

First Rule of Gain Making: Know Your Business. The Time-honored truth"Knowledge is power" is especially pertinent to this
owner-manager of a small business. To maintain your company pointed toward gain you must keep yourself well informed about it. You
have to be aware of how the company is doing before you may improve its operation. You must know its weak points until you can
correct them. A number of the information you need you pick up from day-to-day personal monitoring, but records should be your
principal source of advice about profits, expenses, and earnings.

Know Your Gain. The profit and loss statement (or earnings Announcement ) prepared regularly each month or each quarter by your
accountant is one of the most essential indicators of your business's value and wellbeing. You should make certain that this
announcement contains all the details you will need for evaluating your profit. This statement must pinpoint each revenue and cost
area. By way of example, it should show the gain and loss for each of your products and product lines in addition to the gain and
loss for your entire operation.

It is a good Idea to have your profit and loss statement prepared so that it shows each item for the current interval, for the
identical period this past year, and for your current year-to-date. By way of example, a P&L statement for the month of November
would reveal income and expenses for the current month, for November last year, and prices for the eleven months of this current
calendar year. Many corporations publish their annual reports with several previous years so stockholders can compare earnings.

Comparison is The trick to utilizing your P&L statement. If your accountant isn't already supplying figures that you may compare,
you should talk about the possibility of getting them provided.

Financial Ratios from your balance sheet also allow you to know if your profit is exactly what it should be. For instance, the
ratio of net worth (return on investment ratio) reveals what the business brought on the equity capital invested.

Know Your Costs. An owner-manager ought to know costs in detail. Following that, you can compare your price figures as a
percentage of sales (operating ratio). Be certain that your costs are itemized so that you can put your fingers on those that
appear to be climbing or falling according to your expertise and the cost figures of your own industry. When prices are itemized,
you can spot the culprit when the overall figure is higher than what you'd budgeted. Take advertising costs for example. You can
catch the offender should you split out your advertising expenses by product lines and from websites. Additionally, a thorough
check of inquiry yields from advertisements will help to avoid unproductive publications.

In knowing your Costs, keep in mind that the formulation for profit is: Gain equals Sales minus Costs.

Know Your Product Markup. Be certain The pricing of your products supplies a markup adequate for the sort of profit you expect to
achieve. You must keep constantly informed on pricing because you have to adjust for rising costs and at the same time keep prices
competitive. Knowledge on your markup also helps you to run workouts with your eyes open. Continuing to generate something that
only a few clients want is a powerful merchandising tool just once you use it on goal - for example, to hold or attract buyers to
other high markup products. Don't be afraid to drop a loser from online.

Garbage-In, Garbage-Out. An Owner-manager shouldn't fudge the records. The acronym GIGO the computer industry uses is true with
manually kept records in addition to with machine-processed ones. If an owner-manager lets"garbage" to enter the records, the
accounts will contain"garbage." Reports need not be extensive but they must be accurate.

Look For Trends. Try not to look at a single month's earnings or Profit picture alone. The figures on your operating statements
are significant only when you put the image in the right frame - that is, take a look at your characters in the context of what's
happened and what's likely to happen. In that fashion, you grab a downward trend before it gets out of hand.

You should also Concern yourself with the figures behind the dollars - for example, the number Of units offered or the amount of
orders. Insist on cost-per-unit statistics. The Fluctuation of this cost-per-unit can be more meaningful than just looking At the
dollar figures alone. Another idea would be to display these comparative Figures on graphs so that important trends can be seen
easily.

machine-shop maid-service mailbox makeup-artist makeup-studio manpower-agency marketing-consultant mary-kay masonry massage meal-prep mechanic medical-billing medicine-wholesale men-clothing merchandise metal-fabrication microfinance microfinance microgreens milk-dairy million-dollar mineral-water mink-lash mobile-app mobile-car-wash mobile-mechanic momos money-transfer mortgage-broker moving mug-printing mushroom music-studio mystery-box nail-art office-space-rental oil-change oil-mill oil-refinery online-retail optical organic-farming outsourcing owner-operator-trucking paintball-field paper-bag-making parking-lot