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Ask INSTORE: October 2006

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Predicting your holiday sales, finding time for creativity, things you could outsource, and more.

[h3]Check past holidays’ sales to predict future[/h3]

[dropcap cap=Q.][h4][b]Are there any tricks to getting your inventory balance right? Every holiday season I order either too much or too little.[/b][/h4][/dropcap]

[dropcap cap=A.]David Geller of JewelerProfit recommends the best way to get the balance right is to run a report from your POS system to find out by department and price point how many units you sold during the holidays last year. “This is your minimum of how many to stock,” he says. Then, add in any sales increases you expect this year. Check your stock levels and order the difference, he advises.

The most common mistake jewelers make is to buy too many items in higher price points, thinking they sell more of these items during the holidays. “But in fact they just sell more products — period,” Geller says, noting that the percentages often remain the same. At the same time you should leave yourself some financial flexibility to deal with unforeseen requests. “Going into fourth quarter, many store owners overspend on merchandise, not leaving enough room in their budget for special orders,” says Abe Sherman of the BIG buying group.[/dropcap]

[componentheading]MANAGEMENT[/componentheading]

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[contentheading]Creative Cornered[/contentheading]

[h4][b]I never seem to be able to find time for creative thinking. Work is always a mad rush and my spare time is controlled by the kids. What should I do?[/b][/h4]

Having uninterrupted time to reflect is the key to creativity. Our brains rarely come up with their best ideas when we’re in meetings or in the store, or even in the shower as we rush to get ready for work. In the past, businesspeople could expect to get some relief during the commute home, but mobile phones, iPods, Blackberries, and omnipresent advertising messages can make that impossible today.

The trick is to realize the importance of creative thinking and treat it the way you would a business appointment or meeting. That means finding time for it on your weekly schedule. If you can’t build quiet time into your office routine, the only alternative is to actively flee your usual surroundings, which means doing something like getting on a train and taking a four-hour round trip somewhere. Or, even better, nowhere.

Leave your phone at home, unwrap a sandwich and just enjoy watching the scenery whizz by. It’s amazing what a busy brain will come up with when given a break — even a short one — from reacting to the daily pressures of running a business.

[componentheading]STAFF[/componentheading]

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[contentheading]Plan to Care[/contentheading]

[h4][b]Are there any good health plans out there for small businesses?[/b][/h4]

Your interest in your employees’ well-being is commendable, and sadly, increasingly rare. One of the reasons only one in three small companies — those with fewer than 10 employees — provides coverage is because their costs are so much higher per head than for larger businesses. Nevertheless, there are affordable policies out there (and qualified health plans are fully deductible as a business expense anyway — so you really have no excuse).

The least expensive option is a high-deductible health plan (HDHP), also sometimes referred to as “catastrophic medical plans”. As the name implies, the premiums for HDHPs are low ($1,050 for a single plan and $2,100 for a family plan) because the employee must bear the cost of medical treatment unless it is something serious. As the business grows, though, employers can choose to lower the deductible to $750 or $500 year.

To get started, check out websites like www.hsabank.com and nahu.org, which offer detailed information on coverage options and have lists of providers and insurance agents. In the end, remember: not only is getting health coverage for your staff the right thing to do, it shows your workers you care about their long-term welfare and is a benefit you can use to attract good employees. So, go ahead — do it!

[componentheading]MANAGEMENT[/componentheading]

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[contentheading]From the Outsource[/contentheading]

[h4][b]Outsourcing seems to be the hot thing in small-business management. What are the pros and cons?[/b][/h4]

The motivation behind the outsourcing trend is that it allows you to offload “mechanized” tasks, freeing you up take on more of the lucrative work that you do best. It’s really Economics 101, although in modern business jargon it’s more commonly referred to as “unleashing your core competencies”.

As could be expected, financial and accounting services are the top areas small companies outsource while HR, in particular, payroll and 401(k) administration, comes in a close second. In these instances, the benefits are clear. These are time-consuming tasks that require special skills. In other areas like production and design the question of whether to outsource or not gets more complicated.

If you’re looking to outsource some production work simply to lower your prices then perhaps you need to ask yourself, should you not be trying to improve the quality of your work instead? At the heart of the success of a jewelry business are creativity, ideas and jobs that require a personal touch. Also, ask yourself if the job can’t be delegated or done by a new form of technology. Finally, make sure you get the initial costing right, especially if your company is growing. Only then will you know how effective the outsourcing is.

[span class=note]This story is from the October 2006 edition of INSTORE[/span]

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