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David Brown: Use Your Budget Like a Speedometer

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Without timely data it’s almost impossible to know how you’re doing.

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[h3]Use Your Budget Like a Speedometer[/h3]

[dropcap cap=A]good budget is like a speedometer on a car. Let’s say you are going out for a drive one day and you need to get to a town 200 miles away. You leave at 9 a.m. and know that you need to get there by 1 p.m. To achieve this you will need to travel at somewhere around 50 mph for the entire journey.[/dropcap]

Comparing this to your business performance, your “destination” would be to say you want sales of $1 million. Setting the timeframe for your journey is like saying you want to achieve this goal over the coming 12 months.

[inset side=right]The time to rectify your budget if you are falling behind is after the first few days of the month, not when the month is over. Use your speedometer, and don’t wait for that next roadside sign to come along.[/inset]

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Now imagine you start your journey and discover your speedometer isn’t working —and what’s more there are no signs along the way telling you how much farther it is to your destination or how far you have come.

Frustrating isn’t it? You don’t know whether you are ahead, behind or on time to reach your destination by 1 p.m. You know how much time there is but don’t know how far you have to go.

The likelihood of achieving your destination in the required timeframe has now become that much harder to achieve and is left largely to guesswork.

From a business perspective, if you prepare financial information for your business monthly or quarterly, you will have some idea of how you are going relative to your financial destination — but as with your car speedometer, it can be hard to know whether you are on track during the periods between the reports.

Financial information is mostly historical — a bit like that roadside sign you saw 10 minutes ago that told you that you still have 120 miles to go. But without that speedometer, you won’t be able to work out how you are going until you see the next sign.

An effective budget (or sales plan as we prefer to call it) can help provide timely, relevant information as you need it. This is the equivalent of your speedometer telling you right here and now whether you are ahead or behind on your speed. A good sales plan allows you to measure your business daily so you know whether you need to put your foot on the gas or not.

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So break down your budget into daily targets across each department and monitor it every day during the year.

The time to rectify your budget if you are falling behind is after the first few days of the month, not when the month is over. Use your speedometer, and don’t wait for that next roadside sign to come along.


David Brown is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. You can contact him at [email protected]

[span class=note]This story is from the January 2010 edition of INSTORE[/span]

If you’d like to contribute your own data and receive a personalized KPI report each month, call (877) 910-3343 or e-mail: [email protected].

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SPONSORED VIDEO

Wilkerson Testimonials

If It’s Time to Consolidate, It’s Time to Call Wilkerson

When Tom Moses decided to close one of the two Moses Jewelers stores in western Pennsylvania, it was time to call in the experts. After reviewing two candidates, Moses, a co-owner of the 72 year-old business, decided to go with Wilkerson. The sale went better than expected. Concerned about running it during the pandemic, Moses says it might have helped the sale. “People wanted to get out, so there was pent-up demand,” he says. “Folks were not traveling so there was disposable income, and we don’t recall a single client commenting to us, feeling uncomfortable. It was busy in here!” And perhaps most importantly, Wilkerson was easy to deal with, he says, and Susan, their personal Wilkerson consultant, was knowledgeable, organized and “really good.” Now, the company can focus on their remaining location — without the hassle of carrying over merchandise that either wouldn’t fit or hadn’t sold. “The decision to hire Wilkerson was a good one,” says Moses.

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David Brown

David Brown: Use Your Budget Like a Speedometer

Published

on

Without timely data it’s almost impossible to know how you’re doing.

{loadposition davidbrownheader}

[h3]Use Your Budget Like a Speedometer[/h3]

[dropcap cap=A]good budget is like a speedometer on a car. Let’s say you are going out for a drive one day and you need to get to a town 200 miles away. You leave at 9 a.m. and know that you need to get there by 1 p.m. To achieve this you will need to travel at somewhere around 50 mph for the entire journey.[/dropcap]

Comparing this to your business performance, your “destination” would be to say you want sales of $1 million. Setting the timeframe for your journey is like saying you want to achieve this goal over the coming 12 months.

Advertisement

[inset side=right]The time to rectify your budget if you are falling behind is after the first few days of the month, not when the month is over. Use your speedometer, and don’t wait for that next roadside sign to come along.[/inset]

Now imagine you start your journey and discover your speedometer isn’t working —and what’s more there are no signs along the way telling you how much farther it is to your destination or how far you have come.

Frustrating isn’t it? You don’t know whether you are ahead, behind or on time to reach your destination by 1 p.m. You know how much time there is but don’t know how far you have to go.

The likelihood of achieving your destination in the required timeframe has now become that much harder to achieve and is left largely to guesswork.

From a business perspective, if you prepare financial information for your business monthly or quarterly, you will have some idea of how you are going relative to your financial destination — but as with your car speedometer, it can be hard to know whether you are on track during the periods between the reports.

Financial information is mostly historical — a bit like that roadside sign you saw 10 minutes ago that told you that you still have 120 miles to go. But without that speedometer, you won’t be able to work out how you are going until you see the next sign.

Advertisement

An effective budget (or sales plan as we prefer to call it) can help provide timely, relevant information as you need it. This is the equivalent of your speedometer telling you right here and now whether you are ahead or behind on your speed. A good sales plan allows you to measure your business daily so you know whether you need to put your foot on the gas or not.

So break down your budget into daily targets across each department and monitor it every day during the year.

The time to rectify your budget if you are falling behind is after the first few days of the month, not when the month is over. Use your speedometer, and don’t wait for that next roadside sign to come along.


David Brown is president of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. You can contact him at [email protected]

[span class=note]This story is from the January 2010 edition of INSTORE[/span]

If you’d like to contribute your own data and receive a personalized KPI report each month, call (877) 910-3343 or e-mail: [email protected].

Advertisement

{loadposition xtra-browncolumn}

Advertisement

SPONSORED VIDEO

Wilkerson Testimonials

If It’s Time to Consolidate, It’s Time to Call Wilkerson

When Tom Moses decided to close one of the two Moses Jewelers stores in western Pennsylvania, it was time to call in the experts. After reviewing two candidates, Moses, a co-owner of the 72 year-old business, decided to go with Wilkerson. The sale went better than expected. Concerned about running it during the pandemic, Moses says it might have helped the sale. “People wanted to get out, so there was pent-up demand,” he says. “Folks were not traveling so there was disposable income, and we don’t recall a single client commenting to us, feeling uncomfortable. It was busy in here!” And perhaps most importantly, Wilkerson was easy to deal with, he says, and Susan, their personal Wilkerson consultant, was knowledgeable, organized and “really good.” Now, the company can focus on their remaining location — without the hassle of carrying over merchandise that either wouldn’t fit or hadn’t sold. “The decision to hire Wilkerson was a good one,” says Moses.

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