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Laurie Owen: Leaders and Occupancy Costs

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GIVE YOUR STORE a perfect figure.
4.8%

What is it? How much the top performers in the 2004 Jewelers Financial Benchmarking Study spent on occupancy costs. An occupancy cost of 4.8% means that for every $1 of sales, the company spends about 5 cents on occupancy costs, such as rent, occupancy, utilities, and store security.

Strategy: How to get by with spending less? Start by comparing yourself to others. Find industry benchmarks and see how you stack up, line by line. Monitor your expenses monthly by getting a timely profit-and-loss statement with your expenses in dollars and percentages so you track changes before they get out of hand. Look carefully for unusual fluctuations when examining your statements. Pay close attention to expense items which lend themselves to personal (not business) use by yourself or your employees and evaluate whether you’re getting adequate benefit for the cost (e.g. mobile and long-distance-phone use, company-provided automobiles, Internet-access time, consumable supplies, etc.) At least once per quarter, review all expenses and ask, “How can I reduce this?”

This story is from the June 2006 edition of INSTORE.

Laurie Owen was INSTORE's financial columnist during the first decade of the publication's history.

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