The “trick” is to make the transition when it counts: when you’re wealthy enough to enjoy yourself but still well enough to make the most of the experience. Knowing when this is from a health perspective can be a challenge — a sudden illness can put paid to the best laid plans — but one thing is certain, your health will generally not improve as you age.

Your income and wealth can be a little easier to predict. Some simple budget planning based on current wealth goals and a continuation of your income and its growth rate will answer the first part of the equation — at what point you will reach the ideal level of wealth in order to “call it a day.” The amount that you will need will depend on the extravagance of your lifestyle. Sitting at home in rural Kansas will be a considerably cheaper retirement choice than jetting around the world or setting up a retirement hideaway in Manhattan.

Another factor to consider is your legacy. Do you plan on leaving a sum for loved ones or a favored charity? If so, how much? Or is your mission to clean the bank account out by the last day? Having a lump sum left at the end will increase the amount of money you will need to sock away and may extend the time you will need to continue working.

Whatever method you work with, keep in mind that even as you spend your money down after retiring, the remainder will still bring in a return for you based on the power of compounding. The 4% rule is often cited as an example of how much of your savings you should spend each year in retirement. On the surface, this would seem to indicate your savings would last you 25 years (4% each year x 25 is 100% of your savings used up), but remember, the money that isn’t spent is still working for you, so it’s generally assumed this method can potentially give you 30 years of comfortable living.

The post How to Figure Out How Much It Will Take to Retire appeared first on INSTOREMAG.COM.

The result of all this money sloshing around has been healthy sales for many store owners. This has seen better than average cashflows and bank balances — but with improved sales can come an air of complacency. Given many people are in the habit of spending what they make, it becomes easy to justify a looser spending policy, leaving the bank balance back where it was if trading hadn’t been so good.

Unfortunately, this increased spending can result in the health of the balance sheet, and in particular inventory, being far worse off. I like to compare it to the lottery winner who, having blown all the cash from their winnings, is still left with the hangover of the monthly payments on the Ferrari they’d signed a lease on. Without the lottery win, there wouldn’t have been the Ferrari commitment. Likewise, without the cashflow from increased sales that has led to looser spending attitudes, many jewelers wouldn’t be sitting on bloated stale inventory on their balance sheet.

Fixing this requires a change in mindset and an acceptance that the “good times” of the last couple of years may now be replaced with fresh challenges — especially if a recession does kick in, which even the Federal Reserve is predicting. You don’t want to be realigning your attitude to cash once things get tight. Instead, focus on releasing your old inventory now and building up your cashflow in preparation for the next few months.

Continuing my metaphors, those who don’t put away some chestnuts for winter might find themselves going a little hungry later when the nuts will be harder to harvest. Clear your surplus inventory now before the second half of the year puts more strain on restocking, and before pressure comes on you to do so when you’re least equipped to handle it.

The post Cash Flow Good? Here’s Why That Could Be a Problem appeared first on INSTOREMAG.COM.

SVB, Credit Suisse and concerns around other financial institutions have resulted in a loss of confidence in holding money in deposit accounts, despite assurances being made by the federal government and Treasury that they will do whatever is necessary to bring calm to the market. Depositors have continued to withdraw funds from banks, and this is having an impact on lending for many financial institutions.

In the last two weeks of March, federal statistics showed a decline of over $105 billion in the amount of money lent by U.S. financial institutions — the largest decline recorded since records began in the 1970s. With credit being the largest contributor to the financial sector and growth of the economy, many pundits see this having an impact on economic growth in the coming months, particularly in sectors heavily dependent on borrowing. Banks need money if they are going to lend, and less money in means less money to go out. The reality is banking and the economy are as much dependent on confidence as they are on reality — the assurances of the Treasury Department are only as good as people’s faith in the government and the belief in the people who run it to have a firm grasp of the situation.

The media tend to focus on Wall Street, but this will play out on Main Street also, with smaller businesses likely to be impacted as well. If you are planning to be in the market for finance in the near future, or are intending to refinance your existing debt, it may be a good time to start this exercise. Money supply could become considerably tighter, and rates have yet to pause their increase, so locking in your interest rate might also give you more certainty. It’s certainly worth a conversation with your broker or bank manager to get a feel for how the market is playing out and whether the changing situation could put a constraint on cashflow over the balance of this year.

The post Here’s Why Now is a Good Time to Review Your Debts appeared first on INSTOREMAG.COM.

1. Not having enough money coming in. (real issue: Too much going out.)

Cash flow is a concern for any store, but the focus of the problem isn’t always where you think. The reality is often that too much money is going out, rather than a lack of sales bringing it in. Many business owners overspend on unnecessary expenses, too much inventory being the most significant, which restricts cash and creates its own headache. It’s quicker to buy a bad item than it is to sell it. An open-to-buy budget can help cure this issue.

2. Charging too much. (real issue: Most don’t charge enough.)

Despite the overwhelming evidence of what others are selling things for, I have a hard time convincing many store owners that they simply aren’t valuing their product or themselves highly enough. To overcome this fear, business owners should spend more time looking at the comparison data we compile that shows how stores are performing in areas such as markup. By understanding the market demand and setting prices that are both competitive and profitable, business owners can find the sweet spot that will attract customers and generate revenue without sacrificing their prices.

3. Not getting enough new customers. (real issue: Not doing enough with current customers.)

Marketing for new business is an expensive exercise. Repeat business and word-of-mouth referrals are critical for long-term success and can come at a fraction of the price. Business owners should focus on building relationships with their existing customers by using the data they already know about them. By providing exceptional customer service, offering personalized experiences and maintaining open communication channels, business owners can turn satisfied customers into loyal brand advocates.

4. Not getting enough opportunities. (real issue: Not being discerning enough with the ones they have.)

From a perceived lack of good sellers to struggling to find good staff, business owners often feel they don’t get the choices they need. In reality, we are spoiled for choice but don’t always identify these choices when they are there. As Stephen Jobs famously said, innovation is about saying “no” to 1,000 things.

5. Feeling that everyone else understands their finances better. (real issue: Fewer people understand finance than you think.)

Business owners can gain a better understanding of finances by educating themselves, seeking advice from financial professionals and learning from their own experiences. To overcome this fear, business owners should take advantage of the resources available to them and remember that they are not alone in their journey.

The post 5 Finance-Based Fears Most Store Owners Have (And Why They Are Wrong) appeared first on INSTOREMAG.COM.

Here are some of the most common types of business loans that small business owners can consider.

1. LINE OF CREDIT LOANS. A line of credit loan provides a small business owner with access to a set amount of funds that they can draw upon as needed. This type of loan can be useful for businesses that need flexible financing, as they only pay interest on the amount they borrow.

2. TERM LOANS. Term loans are a lump sum of funds that are paid back over a fixed period of time, typically with interest. This type of loan is ideal for businesses that need a large amount of funding for a specific purpose, such as purchasing equipment or expanding operations.

3. PEER TO PEER LOANS. The growth of the internet has seen many businesses turning away from the traditional lending market and seeking loans from peer-to-peer platforms and private lending companies. This can be an effective niche for acquiring finance in areas not covered by traditional lenders, whose strict criteria on assessing debt can leave little room for alternatives.

When choosing a loan, small business owners should consider several factors, including:

• INTEREST RATE. The interest rate on a loan will impact the overall cost of the loan and the monthly repayments. Compare interest rates offered by different lenders to find the best deal.
• REPAYMENT TERMS. The repayment terms of a loan, including the length of the repayment period and the frequency of repayments, can have a significant impact on the overall cost of the loan. Choose a repayment plan that fits your budget and cash flow.
• IMPACT ON PERSONAL CREDIT. Some loans, such as SBA loans, do not require personal guarantees, while others may have personal guarantees as a condition of the loan.
• PURPOSE OF THE LOAN. Choose a loan that fits your specific needs. For example, a line of credit loan may be ideal for businesses that need flexible financing, while a term loan may be better for businesses that need a large sum of funding for a specific purpose. Peer-to-peer may work best where the collateral is a higher risk security (e.g., a property development).
• LENDER REQUIREMENTS. Consider the requirements of different lenders, including their credit score, revenue and length of time in business. Some lenders may have more stringent requirements than others.
• COLLATERAL/SECURITY. What must you come up with to satisfy the lender’s collateral criteria? Are you comfortable with this? What will its impact be going forward?

By carefully considering these factors, small business owners can find the loan that best fits their specific needs and helps their business succeed.

The post Here’s How to Choose the Business Loan That’s Right for You appeared first on INSTOREMAG.COM.

The butterfly effect has been cited in many non-weather examples over the years, with countless examples represented in the business world. There are few better illustrations of its impact than how small tweaks in margin can lead to large-scale increases in the bottom line.

Let’s look at your fast-selling product in diamonds. Given the 80/20 rule applying twice — firstly to the low number of overall store items sold that are diamonds compared to your total items sold, and secondly due to the fact that a large amount of your diamond dollar sales for one year may be produced by just a handful of diamond items — it starts to become easy to see how a slight increase in margin can drive a more significant increase in sales.

Our example store achieves $400,000 of their $1 million in annual sales from diamond product. This is achieved from selling just 400 items at an average of $1,000 from total store unit sales of 5,000 items that made up the $1 million in sales. Already we are seeing the first 80/20 rule applying (8% of sales units (400/5000) have contributed 40% of sales ($400K/$1M).

Of these 400 items, just 8 items (2%) were responsible for half the diamond sales ($200K) at an average sale of $25,000 ($200K/8). Our second 80/20 rule has kicked in.

So, 8 items (just 0.16% of total items sold) are responsible for 20% of the total year’s sales ($200K/$1M). Suddenly, it becomes crucial what margin was made on this product. The store owner achieved 35% margin on these eight items. What if the store owner had achieved 40% margin on these same items? The $70,000 gross profit achieved at 35% suddenly becomes $80,000 at 40% margin and $90,000 at 45% margin. Given other costs are fixed, these eight items will suddenly contribute an additional $10,000 or $20,000 to the bottom-line profit, depending on the margin used.

Eight sales … $20,000 extra profit. Yes, it may be easier said than done, but is there a quicker way of adding to your bottom line than to review the price you set on your biggest dollar sales achieved? You don’t need to flap the wings too many times to create a hurricane on your bottom-line profit.

The post Here’s What the “Butterfly Effect” of Margin Could Do to Your Bottom Line appeared first on INSTOREMAG.COM.

From a personal perspective, you may be weighing up your refinancing options if you’ve been on a low-rate loan whose fixed period is ending soon or you have a need for additional funding. Will rates continue to increase (making a new fixed period desirable now), or is it best to ride it out and wait for interest rates to come back down again?

Unfortunately, I don’t have a crystal ball regarding the Fed’s actions, but I can suggest there are a few questions you need to consider before making your decision.

Your current interest rate. What is the increase in interest costs you can expect from refinancing? Can you afford the extra outlay?

Your timeframe. How long until your current interest rate arrangements end? How long until your loan will be paid off? These questions will affect your overall cost through the remaining life of your loan.

Your reasons for refinancing. Is this a ‘must have’ or a ‘nice to have’? If the refinancing is avoidable, should you wait for more solid economic signals?

Fees and other costs. What refinancing costs will there be? Refinancing often comes with administration fees, broker’s fees and legal fees among others, which can add a considerable amount onto your true cost. Make sure you take these factors into consideration.

The impact on your credit rating. Will refinancing affect your ability to borrow in the future?

The value of your security. Has your secured asset increased in value since the last financing? Is there a risk of it reducing in the current market, leaving you exposed?

These simple questions will help you set a clearer vision for your refinancing. It pays to discuss this in more detail with your mortgage broker, financial planner or CPA to consider all the factors that can affect your decision.

The post Before You Refinance in 2023, Here’s What to Consider appeared first on INSTOREMAG.COM.

On store visits, I will often notice some interesting pricing amounts appearing — sometimes, product is priced with a 7 or a 2 on the end, such as $147, or $2,142. In these cases, the price has obviously been set as a multiple of wholesale cost without considering whether any profit is left on the table. It’s surprising what a difference an extra dollar or two can make when you consider it over the space of a year.

Let’s say a silver item that normally sells for $94.50 is repriced to $99. Only $4.50, you might think — is it worth the effort? Multiply that amount, however, by thirty sales of that one item in a year, and you’ve picked up another $135 in straight profit. Assume the same thing can apply across two thousand items sold in a year, and you start to have a serious impact on your bottom line.

An extra $5 an item might be a good start, but what about bigger ticket items? Your piece that sells for $2,142 can soon be $2,199; an item that might calculate up at $11,736 can be $11,995; and suddenly you’re starting to get meaningful results on larger ticket items. Ten sales at $11,995 and you’ve increased your profit by $2,590. Not an amount to be sneezed at!

A few items can make all the difference — just concentrating on the 20 percent of items that give you 80 percent of sales can significantly lift the bottom line if you’re looking to increase margin by just a percent or two. Even pieces that are already rounded can often go to the next pricing level.

The best part is, your cost of sales doesn’t increase. Yes, there may be some reticketing involved, or you might just reprice items as they come into store; the choice is yours. Either way, it takes the same effort to sell the item with no additional expense. It’s easy to see how you can add thousands of dollars to your bottom line over a year just by changing your approach to pricing these products.

Would a few dollars here or there make any difference to your customer’s desire to purchase the item? Evidence from many jewelers pursuing this rounding practice has shown it’s not the case. Don’t leave money lying on the table that could be in your bank account. With financial conditions beginning to toughen, you might be grateful for that little bit extra come the end of the year.

The post Why Rounding Up Your Pricing Can Make a Big Difference to Your Bottom Line appeared first on INSTOREMAG.COM.

It’s important to “numbify” our objectives at this stage. This is best achieved by viewing the steps to the process rather than just the overall result. A successful sports franchise won’t just set the objective of winning the championship; they’ll break it down into how many wins they’ll need to achieve the objective, what each player’s numerical contribution will be to achieving those wins, then prepare their team to carry out their individual roles. Your business should approach it the same way.

Here are your key metric measures for this holiday season:

1. Total Sales: This speaks for itself. However, it needs to be broken down further

Units sold: How many items will you sell?
Average retail value: At what price will you sell them?

2. Gross Profit: An increase in sales combined with a drop in profit is not a successful formula! The factor that will determine whether you’ve been profitable enough is:

Mark-up Achieved: What percentage profit will you make on each sale?

3. Inventory Level: How much product will you need to achieve your objective? This will come as a function of:

Stockturn: How often will items sell through during this period? The faster you turn the items over, the less inventory you will need to achieve your objective.

4. Salesperson performance: What contribution do you expect from each staff member relative to your overall sales target? In the same way a successful basketball team will set a goal for points scored per player, you need the same objective for your sales team. This will then set the parameters for the training they will need. Again, this can be broken down by product category, units sold, and average retail on an individual basis to fit with your overall store goals.

The process of working through these questions is a key component of the sales plan we prepare for clients. If you have any questions around this process, please feel free to reach out to our team at inquiries@edgeretailacademy.com.

The post Here’s Your Scorecard for Measuring Holiday Success appeared first on INSTOREMAG.COM.

FOR ANYONE FOLLOWING the stock market at present (or for that matter cryptocurrencies, the property market or any other asset bubble), you could be forgiven for requiring a strong dose of medicine each day just to survive. Economically, we live in a time that can best be described as “interesting” — providing, almost simultaneously, great wealth opportunities and widespread financial destruction, depending on which side of the ledger you sit. Those who have been involved in tourism over the last two years have been decimated, whereas anyone providing a service that can be done from home has been printing money. The rest? Somewhere in between.

The true impact of Covid lockdowns has been deferred by a wave of government money, but the consequences of these actions are now starting to catch up with us. Supply restrictions, combined with too many dollars chasing too few products, has resulted in rising prices. In an effort to curb this, central banks have reverted to their trusty handbooks and gone with the tried and tested method of raising interest rates to curb borrowing and demand. How this plays out will be interesting to say the least.

What we can be sure of is the cost of money will be increasing, which will have a material effect on the time value of holding money and the cost of borrowing it. To protect yourself in these times, it pays to review your balance sheet and see how this increased cost will affect your business.

Review all debt. Are you able to comfortably manage a rate increase? At what interest rate will things start to become tight? You’re best to know these answers now. Are you able to refinance and lock in some certainty before money becomes more expensive?

Build a cash buffer. Sitting on cash during times of rising inflation is not always a good strategy but it will buy you some time at present. Rising interest rates will, at least, ensure you get a better return on your money while you sit on it.

Find more capital. It may not be necessary but, if the need arises, can you inject more capital into your business? If so, where can it come from??

Sort your debtors and creditors out. Retail is a wonderful cash business, but if you do have anyone buying on account, the cost of not getting that money in could be about to go up. Likewise, many of your creditors may start to put more pressure on you to pay your accounts promptly. Planning will prevent this being a shock if they ask.

The warning signs of economic uncertainty, and possibly a severe recession, are there. Head them off while it’s easier and cheaper to prepare.

The post Why It May Be Time to Tighten Your Balance Sheet appeared first on INSTOREMAG.COM.