CHECKING UP ON YOUR BANK
With everything that’s going on in the financial markets, should I be checking the credit worthiness of my bank?
WHEN THE FDIC seized IndyMac Bank last year, there was almost $1 billion in uninsured deposits, so you’re right to be concerned. It’s pretty difficult, however, for a layperson to establish the true credit-worthiness of a bank — even the pros on Wall Street didn’t see this mess coming.
The Federal Deposit Insurance Corporation won’t disclose bank ratings but you can use its Electronic Deposit Insurance Estimator to calculate the exact amount of insurance coverage that your small business has at an insured bank. For a small fee, Veribank will also give a full bank rating. Financial crisis or not, you and your accountant should be maintaining a “conversation” with the bank (you should be in contact at least every three months).
The things you should know include what your bank specializes in (a heavy real estate portfolio could be a red flag), and what its delinquency rates and Federal CAMEL ratings are (“1” is good, “5” is scary). Also, ask your bank if it’s a Certificate of Deposit Account Registry Service (CDARS) affiliate. CDARS is a program that provides protection for slightly longer-term deposits. Some financial experts advise against spreading your deposits around two or more banks to keep deposit levels below the new FDIC threshold of $250,000, because it will create havoc on your books.
INSTORE columnist and business coach Laurie Owen doesn’t downplay the hassles involved in twin-account bookkeeping, but says if you’re not confident in the homework you’ve done on your bank, spreading the risk is better than being caught underinsured. Final point: Don’t get overly alarmed about the safety of your finances. It’s still very, very rare for a bank to go completely bust. Usually they are taken over or bailed out first.
GOLD
How do most jewelers work out what to pay for gold they buy off the street?
This was a question tailor-made for the Brain Squad, whose members answered with an amazing range of formulas. If we could sum up their responses it would go something like this: Check the spot price at a live market website such as kitco.com or goldprices.com at one of the refiners’ websites. Work out the scrap price — often by using charts supplied by refiners such as Jack Hunt, General Refining or Hoover & Strong — and offer 50 percent of that to the customer to cover shipping and insurance costs, safeguard against price swings and protect a close-to-keystone profit. Others got away with paying less. One Brain Squad member told us he’d paid the same $4/gram for 18K scrap for 10 years and hadn’t lost too many sales as a result. Another said he refines customers’ gold and returns the cash to the customer minus 10 percent as a service charge. Our take on all this? You should join the Brain Squad — there are some great ideas being swapped. E-mail us at brainsquad@instoremag.com.
EMPLOYEES
I read about Whitehall’s being successfully sued for turning down a job candidate because she wore a headscarf. Does someone’s right to wear religious attire always trump store policy?
As a general rule, if an employee holds a sincere religious belief that affects his or her job, the employer must at least try to find a way to accommodate the worker if it is reasonable to do so and it would not cause the business too much hardship, says Larry McNamara of the law firm Spencer, Crain, Cubbage, Healy & McNamara in Dallas, TX. This could mean that in a situation involving a headscarf you could refuse to allow a Muslim employee to wear a face-covering chador on the grounds that customers look for visual clues such as smiles, etc., but not prohibit the wearing of a regular face-revealing version.
DE BEERS SUIT
We filled out the claim form for the De Beers class action suit months ago and never heard back. What gives?
The payment process has been held up by appeals by a number of parties, although not De Beers, which appears to want to put the whole episode behind it. You can check for updates at diamondsclassaction.com or contact the administrator at administrator@diamondsclassaction.com or (800) 760-5431.
VALENTINE’S DAY
Do you have any good, original low-cost ideas for Valentine’s Day?
Good ideas? Yes. Stacks. Original? In the sense we created them? No. But here’s the best from our archives:
- Try a mix of pale and hot pinks to decorate the store instead of the usual red and whites.
- Similarly, try lush feathers instead of flowers, ideally positioned near the air-conditioning vents so you get some motion.
- Get in some chocolate diamonds — they’re even in fashion.
- Scatter some heart-shaped candy or even vintage Valentine’s Day cards among your displays.
- Through your website, hold a “Why I Love You in 25 words or Less” contest. OK, not so original but hire a bunch of 5-year-olds to write out the e-mails in crayon and plaster the drawing paper in your front window. That’ll get a crowd.
- Team up with your local candy and flower retailers and offer a bundled present.
- Insist the entire staff wear red from Feb 1-14.
- And best for last, set up a karaoke unit at the front of your store. Load it up with the soppiest, goopiest songs imaginable — Diana Ross’s Endless Love, Debbie Boone’s You Light Up My Life and that deathless stinker, Charlene’s I’ve Never Been To Me. Print lyric sheets. Give anybody who sings a song to his girlfriend a low-value gift certificate or discount coupon. And give the day’s best performance a sparkling prize.
This story is from the February 2009 edition of INSTORE