Planning Purchases Prevents Poor Performance

Okay, so my apologies to the original 5 P’s slogan, but I want to get to the root of the message in this installment. Planning is key. Yes, sometimes people are just plain lucky, but that is rare. Most long-term successful shop owners have a plan, and work the plan. Don’t underestimate the part this plays in their success.

In the world of fabric, the four seasons represent new releases from the fabric producers. It is really a constant thing, but the uptick in the numbers is measurable for “winter” and “summer” collections. The big surges are in “fall’ and “spring” offerings. That said, release dates are not your challenge, delivery dates are!

Specific examples are often useful, so let me use Henry Glass as an example.

I just received 15 new collections from Henry Glass, representing their early Spring 2019 releases. Keep in mind, since Quilt Market is held in May, there may be some newer releases to come, but this is the major portion of what we’ll see from them for now. Of those 15, three are available “now,” four will deliver in August (five months from now), four more in September, one in October, and two in November. The 11 that are future releases represent 147 SKUs to choose from. Your challenge is to a) choose from those 147+ fabrics those that will sell in your shop, b) choose quantities that will sell in a timely manner, and that work in your OTB plan, and c) keep track of when those fabrics are scheduled to deliver – along with any other fabrics from Henry Glass or Benartex, or Moda, or Northcott, or…- you get the picture – you have bought or may buy in the future. Here is where your planning will pay off!

A caveat that I must add is (and you already know this if you are a shop owner), delivery dates are not carved in stone. A September delivery date is often a “Septober” window. Could be September, but just as likely to be October – and could be later, depending on issues the manufacturer encounters in the production of the collection. Unless you specify a cancel date when ordering, your budget is potentially subject to ebbs and flows that will challenge your planning. Buyer beware!

I have seen shop owners who write nothing down during the selection process. Others keep a journal, recording manufacturer, collection, number of SKUs ordered, and pricing. Still others take photos with their cameras of any cap sets or folio cards selected during the process. One owner brings her laptop computer into the meeting, recording SKUs, quantities, pricing, and delivery dates as the orders are placed. (As an aside, she is only dealing with me with one vendor, so this is easier for her to do than my typical shop owner, but it’s an amazingly “perfect” scenario of being on top of the process!) There is no “right” way to keep track, but there are smarter ways to do it. Your plan has to fit your shop and your capabilities.

So, you know you need a way to plan, but how to do it? I’ll address that in another episode, but be thinking about your process and where the holes in your process are. I will give you some concrete guidance to help you create a Planning Process that helps you to Prevent Poor Performance. Stay tuned!

Another One Bites the Dust…

Another of my customers notified my distributor of her shop’s impending closure. “Please cancel all open orders”, the email read. The more I study and observe these shops across my territory, the more I am convinced that it is not just one factor that will shutter the doors, but more often, a series of miscalculations that leads to an unwanted closure.

There are so many pieces to operating a successful shop, and planning a budget is one that — more often than not — is not handled as a priority.

Don’t get me wrong, I LOVE fabric! And, all the cool notions that accompany the work of quilting. (Did I say WORK? lol) So, I understand how easy it would be for a shop owner to fall in love with more than the budget will allow. And, that’s if there is even a budget to use for reference.

There is a system known as Open-to-Buy (OTB) that uses planning to calculate how much of the budget can be spent on inventory during a specific period. Of course, this method presupposes that you know how much inventory you have, have a good estimate or experienced expectation of your end of period inventory, a sales figure for the period based on more than “I wish, and any adjustments that will affect your OTB number.

The first important number to have is what you want your inventory level to be. For most shops it may be almost steady, with minor bumps for holiday fabrics or special promotions, but in order to keep the inventory steady, you have to replace what you’ve sold.

(The following is an example…not a rule or average or anything concrete. It is just to show you some numbers so you can understand the process.)

A simplified example of this calculation is to assume $500,000 (based on retail value) for a normal inventory, then subtract your expected sales for the period, also based on retail – or actual – value. So using the $500k inventory value, and subtracting projected sales of, let’s say, $50k, just to keep the inventory constant, you would then need $50k of new product on your shelves.

$500k – $50k + $50k = $500k

Sounds simple enough, but assuming that $50k cost you about $27k to purchase, that’s what your OTB figure should be, barring adjustments for other factors. You only get to spend $27k to replace your inventory, not $50k. Spending $50k would raise your inventory level, and steal your operating capital, which pays the rent, the utilities, the help, the marketing, etc. It’s a big reason shops fold.

So, if you’re an owner, have and use a plan, have and use a budget, and have the willpower to stick to them, even if the sales rep across the table is showing you some amazing stuff this week.

As Nancy Reagan once famously advocated, “Just Say No!” Of course, she was talking about drugs, but I’m not so sure fabric isn’t just as powerful as some of that stuff!

Have a great week, and keep the lights on for those quilters; they’re counting on you!

Going it Alone

Partnerships are precarious arrangements. My accounting professors equated them with marriage — with similar failure rates. However, having a second – or third or more – pair of eyes and the benefit of multiple troves of experience seems to beg the consideration of adding another person to the venture of opening a retail shop.

Even though money is often the cause of breakups, when opening a shop, money to fund operations – long enough to outlast the momentum-building early days is crucial to the shop’s survival. Having two pockets to draw from is usually better than one.

It’s often the case in successful shops that the partnership brings together different attributes which make the sum of the skill sets greater than would typically be found in one person. A recent observation I made was a methodical, detail-oriented partner, paired with a creative, design-oriented partner. These two, respectful of each other’s assets and talents, manage the business aspects and day-to-day of running a business, while also creating an inviting, attractive venue with a thoughtful flow to the shop. Adding social media skills, arranging interactive opportunities for existing and potential customers, and the elements came together. Less than one year in business, their shop is humming smoothly along.

I’ve been in shops where no rhyme or reason prevails in placement of fixtures, fabric, or displays. There is no flow to the shop as I enter. The jumble of the contents feels more like a negative energy, tugging at me as I decide whether I think I’ll find what I need; and maybe if I think it’s worth it to try.

The successful shop I mentioned earlier – same city, same day – I enter to find attractive, well-placed and stocked displays. Fabrics are arranged in groups that please the eye and draw me over to investigate. Notions are neatly arranged, but also placed around the shop near relevant project displays. Cabinets and shelves break up the path, but in a way that guides me naturally through the shop. It’s not a tunnel or maze, but a bread-crumb trail.

Not surprisingly , the first store has almost no one in it, while the second store is buzzing with activity.

The first store is a sole-owner store. The second store is a partnership of two perfectly matched people who have complementary skill sets and have created a harmonious atmosphere where creativity thrives.

There are no guarantees, and partnerships can be difficult if not entered into thoughtfully and with the right person. But, if done right, what you lack as an individual will be supplemented by another’s talents and skills; a combination that might make the difference between making it in the world of retail…or not.

Where’s Your Bathroom?

I know, it is not what you want to hear, right? You have storage in there. Or, maybe it’s just a disgusting place. Or, just maybe, you’d like to think of it as your bathroom, your private bathroom.

Think again. If you’re in business with a brick-and-mortar shop, you want people to stop by to shop. Maybe, they’ve been out all day, or at least long enough that the coffee is going to need an escape route soon. Tag, you’re it. The choice to say “no” is yours, but chances are that will cut the shopping short without a sale.

The smart attitude is to expect this and to prepare for this eventuality. Find another place for your storage. Clean up the bathroom so you have another good impression of you and your shop waiting for the visitor in need of your facilities.

Is that all I had to add to this topic? Of course not!

What’s in your bathroom besides the facilities? A nice picture on the wall? Take it down! Cute framed sayings? Take those down too!

Why waste your prime wall space on decor that is irrelevant to your business? How about a cute wall-hanging that you have made kits for? (Be sure to include an index card on it with some of the info, so they know what to ask about when they get out.) How about information with a picture of what your next class will be? Or maybe, a few pieces of the latest fabric collection with a picture of the quilt for that collection? Again, be sure to include a small card with info so they can find it in your shop. You get my drift?

Every inch of your shop should be working for you. The bathroom is no different. Clean it up, spruce it up, and deck it out with the best of what’s new and up-coming to your shop. (And don’t forget to be sure that your room is well-lit. If they can’t see well, you can’t get their full attention, now can you?)

The More You Know…

Mom loved pithy sayings. She especially loved tongue-twisters. One of the sayings that stays with me most? “The more you know you know you know, the more you know you need to learn.” You have to pause at the right places for it to make sense, but when it does, you know there is wisdom in those words.

Whether you are a seasoned shop owner, or just coming out of the gate, there are moments you may wonder, “what was I thinking?”

Well, I can tell you from visiting with shop owners in scores of locations — you’re all in the same boat – there are good days and bad days, good months and bad months, good years and bad years. I won’t say I can guarantee that you won’t have bad days if you do a specific thing, but I can tell you that I’ve seen practices that seem to keep the regulars coming back, no matter the “weather.”

Just as a juggler must keep all the balls in motion to keep his audience’s attention, so you must keep the important pieces of shop ownership “hitting on all cylinders” to keep your customer’s attention.

If I use the analogy of a person in a boat who has the purpose of catching fish – are you waiting for fish to jump into your boat, or have you thrown your line — without a hook — into the water? To take it a step further, have you put any bait on that hook? If so, was that bait specifically chosen for the fish you want to reel in?

If you sit in your shop with bolts of fabric, some patterns and notions to sell, without doing any marketing, consensus building, or research to back up your buying decisions, you may be like the fisherman who sits in the boat without casting his line into the water. Or the person who casts his line without any bait. And, if you are fishing with the wrong bait for the fish who live within the radius of your fishing line, then you may not succeed at bringing in the catch you need to keep your doors open.

I’m here to help you cast the line, with the right bait on it, into the waters within your reach and reel in the catch that keeps your doors open and your business growing. You in?

The Journey Begins

I’m still learning. How about you?

“The more you know, you know you know, the more you know you need to learn.” — Mom

The quote is probably attributable to someone else, but my mom said it so many times as I was growing up, I always give her the credit for it. My logic follows – the farther back someone pegs the author of a quote, the more I believe it’s universal and just came out of thin air to many people at the same time. Creative thoughts are like that. No one really owns them, because very few have no comparable predecessor in existence.

So, why reinvent the wheel if so many ideas are already out there? I can’t think of a single reason, can you?

Most businesses follow a similar life cycle. Someone has an idea, whether it is quickly taken to market, or it is considered and carefully planned for a while before acting on it, it begins with that idea. That’s where most of the similarities end. Perspective sets in and people have lots of different ways of thinking an idea should develop or what it looks like when it does.

You open a shop because you love the fabric you’ll be selling or the idea of having access to so many beautiful collections and notions and tools around you is more than you could resist. There are worse reasons to open a shop. Maybe there wasn’t a shop near you and you relied on your quilting friends’ promises that they would keep you in business. How’s that working for you?

If you had to go out to find a shop location, put lots of money into renting and fixing up of the shop, getting licenses, and then ordering lots of fabric and notions so the shop wouldn’t be empty, then I would assume that you got a quick dose of reality. Even if you opted to start by filling up your bedrooms, living room, basement, and maybe even the garage with fabric, you may be wondering, “what was I thinking?”