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David Brown: Divide and Conquer

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In the fifth and final step of GAP Analysis, you’ll learn to measure your progress toward your sales and profit goals for your store.

 Having completed the four steps of the GAP Analysis (INSTORE, issues January-April 2008) this next step will help you to create a roadmap so that you can measure your progress towards your sales and profit goals. Remember, if you are serious about achieving your future wealth and retirement goals then please complete the four steps before continuing with Step 5 here. 

Monthly Sales Analysis

Continuing on with our example of GAP sales of $1,062,265, we now need to break the annual budget down into realistic monthly targets. 

Because not all months are created equally we need to divide the annual budget into relevant seasonal proportions. For example, December sales for most stores represent between 20 and 22 percent of total annual sales whereas other months can be as low as 5 percent. 

We suggest you look over at least three years of sales-history trends to help even out any exceptional highs or lows (see Table 1 below). 

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In this table you will notice that for the month of June (highlighted), sales have ranged from 6.5 percent in 2005 to 8 percent in 2007 with the average being 7.23 percent. 

Therefore, if the average June contributes 7.23 percent of total sales then your budget for next June would be $76,802 (7.23 percent of $1,062,265 equals $76,802). 

If you do not have history going back this far then either go back as far as you can and draw your own conclusions or use industry averages. 

Please take into account any months with unusual trading patterns such as sales months, closed for refit etc. as these can distort the normal seasonal breakdown.  

Daily Sales Analysis
We would also suggest breaking the monthly budget into a daily budget. The easiest way to do this is simply to divide the total budget by the number of trading days. For example, if the budget for June is $76,802 and your store is open for 25 days, then your daily budget is $3,072 ($76,802 divided by 25 equals $3,072 per day). 

Table 2 (above) shows what a monthly breakdown might look like. 

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If you want to strive for best practice then your daily budget can be broken down among the sales team. For example, if Mary typically does 25 percent of the sales then her personal budget for June would be $19,201, or $768 per day.  

Again, the easy part is setting the budget, the challenge is how to achieve it consistently.  

Action Steps: 

Calculate the average percentage contribution made by month using three years of historical sales data or industry benchmarks. 

Divide your annual sales budget by the percentages in Action Step 1 (as per Table 1) to arrive at a monthly budget. 

Get out a calendar and work out the number of days you will be trading each month. 

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Now divide your monthly budget by the number of trading days (see Table 2) to arrive at a daily budget. We recommend you split your budget between the sales people so you can manage their activities and measure their results. 

Implement a daily team meeting. (We have notes on how to facilitate these Daily Edge meetings available free of charge.) 

TMT it. Test, Measure and Tune your strategies and results. 

Congratulations on successfully completing Step 5. 

[email protected]

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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: Divide and Conquer

Published

on

In the fifth and final step of GAP Analysis, you’ll learn to measure your progress toward your sales and profit goals for your store.

 Having completed the four steps of the GAP Analysis (INSTORE, issues January-April 2008) this next step will help you to create a roadmap so that you can measure your progress towards your sales and profit goals. Remember, if you are serious about achieving your future wealth and retirement goals then please complete the four steps before continuing with Step 5 here. 

Monthly Sales Analysis

Continuing on with our example of GAP sales of $1,062,265, we now need to break the annual budget down into realistic monthly targets. 

Because not all months are created equally we need to divide the annual budget into relevant seasonal proportions. For example, December sales for most stores represent between 20 and 22 percent of total annual sales whereas other months can be as low as 5 percent. 

Advertisement

We suggest you look over at least three years of sales-history trends to help even out any exceptional highs or lows (see Table 1 below). 

In this table you will notice that for the month of June (highlighted), sales have ranged from 6.5 percent in 2005 to 8 percent in 2007 with the average being 7.23 percent. 

Therefore, if the average June contributes 7.23 percent of total sales then your budget for next June would be $76,802 (7.23 percent of $1,062,265 equals $76,802). 

If you do not have history going back this far then either go back as far as you can and draw your own conclusions or use industry averages. 

Please take into account any months with unusual trading patterns such as sales months, closed for refit etc. as these can distort the normal seasonal breakdown.  

Daily Sales Analysis
We would also suggest breaking the monthly budget into a daily budget. The easiest way to do this is simply to divide the total budget by the number of trading days. For example, if the budget for June is $76,802 and your store is open for 25 days, then your daily budget is $3,072 ($76,802 divided by 25 equals $3,072 per day). 

Advertisement

Table 2 (above) shows what a monthly breakdown might look like. 

If you want to strive for best practice then your daily budget can be broken down among the sales team. For example, if Mary typically does 25 percent of the sales then her personal budget for June would be $19,201, or $768 per day.  

Again, the easy part is setting the budget, the challenge is how to achieve it consistently.  

Action Steps: 

Calculate the average percentage contribution made by month using three years of historical sales data or industry benchmarks. 

Divide your annual sales budget by the percentages in Action Step 1 (as per Table 1) to arrive at a monthly budget. 

Advertisement

Get out a calendar and work out the number of days you will be trading each month. 

Now divide your monthly budget by the number of trading days (see Table 2) to arrive at a daily budget. We recommend you split your budget between the sales people so you can manage their activities and measure their results. 

Implement a daily team meeting. (We have notes on how to facilitate these Daily Edge meetings available free of charge.) 

TMT it. Test, Measure and Tune your strategies and results. 

Congratulations on successfully completing Step 5. 

[email protected]

{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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