My middle-class upbringing exposed me to an appreciation for saving money. Like my grandparents – they had huge piles of coupons lying on their kitchen table every single time I went over there. And my parents, I saw them save too. Buy less junk food, no new shoes, we don’t get the cool pants this year. Yeah, I’m still scarred from that one, but that’s a different story.

So I decided to put my middle-class upbringing to the test this week and push the boundaries of normal consumerism. Something more like Gonzo consumption. Here are the three little battles that added up to one big victory.

Cell Phone Victory

I spend a lot of time on the phone. I talk to clients, I gather information, I chat with my friends. So for the second month in a row I’ve gotten a little too crazy for my cell phone company and went over my minutes. That means it’s probably time for me to get a new plan because clearly this one isn’t working anymore. I call in and find out the only plan with more minutes is unlimited for $99/mo. My current plan was $50/mo. Not super pumped about doubling my monthly bill, I decided to hit the Street in search of a better deal.

That meant Googling “cheap cell phone deal” and sifting through the results. I came up with an offer from a leading cell-phone company for unlimited at $50/mo. That was half of what my current company had offered me! Looks like I’ve got a winner on my hands.

So I called back in and told them about my new offer. Without even blinking an eye, the young lady on the other end of the phone offered a “special” package besting the competition at $49.99/mo.

I was blown away. You don’t want me to send this offer to you? Do you want to verify that this is real? No such formalities. I was moved into the $49.99/mo crowd and sailed happily into my day.

The Olive Bar at Whole Foods

I don’t know what it is about Olives, but I love them. I think they are delicious. There’s something about that rubbery texture that just gets to me.

So it didn’t take me long to discover the olive bar at Whole Foods. No doubt this has to be the premier olive bar in the city, but it also happens to be expensive; to the tune of $8.99/lb. That’ above the $7.99/lb for the salad/hot bar but below $13.99/lb for premium roast beef.

I knew it would be dangerous for me to dabble with the olive bar, because to an olive lover, a pound of olives doesn’t really get you very far. But I couldn’t resist. So sure enough, a few months go by, and I am recklessly hitting the olive bar 2-3 times a week. My cute little romance with olives has turned into a $16-$20 a week habit, putting me out about $1000 at the end of the year. Holy smokes, I have a serious olive problem!

Anyway, long story short, I decided to cut back on the olives. Cutting some luxury or highly discretionary spending from your budget is a quick way to save cash. A friend also introduced me to quality olives out of a jar. They are cheaper and just as good.

Annual vs. Monthly

When I was at the gym the other day whaling away on the elliptical, I noticed some fliers announcing sales on annual memberships. At the time I was paying monthly, so I wondered if I could save some cash by shifting to a different model.

Turns out I could. My monthly rate was $45. Going to the yearly plan pushed that down to $34, adding another $11/month onto my roll. Not exactly rocket science or trading derivatives, but a guaranteed return none the less.

The Power of Numbers

So when you add all the little victories together you have something with real substance. In this case, that’s a monthly savings of $133 that comes out to $1500 at the end of the year. And who wouldn’t like to get a big check out of thin air once a year? It takes a little discipline and some strategic moves, but in a world that is ultra competitive to earn high wages, savings translate directly to the bottom line.

Savings Profile

• Cell phone-$50
• Olive Bar-$72
• Gym Membership-$11

Monthly-$133

Annual-1.5K

1.5 is a lot of money to most people – and certainly small biz owners who have overhead to manage in their storefronts. So there’s only one more point to make – what can you cut back on to save some cash for you?

MONEY MATTERS is a weekly column on the Retail Minded Blog that is contributed by Michael Vodicka, founder of boutique financial consulting firm the Vodicka Group. MONEY MATTERS is Retail Minded’s way of supporting independent store owners with all their financial concerns, real life needs and everyday issues both in and out of their  stores. You can find MONEY MATTERS every Wednesday on RetailMinded.com as well as in each issue of Retail Minded Magazine. 

Closeouts are available in many product categories, including clothing, home decor, footwear, accessories, toys and more. They are essentially divided into two categories – salvage items and job-outs. The first category we look at is salvage product. Salvage merchandise consists of customer returns, floor damages and samples. Due to this mixed assortment, some items may be damaged – however damageable does not always mean unsellable. This will depend on the product and the damage. That said – the majority will not be damaged.

The second category of closeout merchandise is job-outs. This category identifies items that were already on a retail floor somewhere and did not sell. As a result, their cost has been reduced for a quick sell to another retailer and ultimately, to a new consumer audience. Like salvaged products, there is a chance for damaged goods. But the percentage is much less – often less than 5%, though as high as 10% has been reported from retailers we’ve spoke with.

One thing to understand among most closeout purchases is that you typically buy in bulk. For example, you may buy 100 total units versus four 6-packs of a specific item. The bulk buy you make is almost always assorted with a variety of items. For example, you could buy a 100 assorted buy of t-shirts from at least ten different total vendors. Or you could buy 100 total units of mixed accessories such as headbands, barrettes, bracelets, rings and more. A closeout dealer will be able to identify a lot of what each bulk, assorted buy has to offer – but there will always be a bit of a surprise when buying closeouts. For many, that is part of the fun! For others, this may be where they get stuck in the buying process. Luckily, there are great resources for this that alleviate a lot of the questions about buying closeouts. One site to look at is Merchandize Liquidators, who do a good job at delivering quality closeout products.

Many indie and small retailers shy away from closeouts simply due to their lack of understanding or even the “bad rap” that closeouts sometimes have. Our advice? Consider what is best for you. Closeout liquidators exist because it has proven to be successful for many retailers to buy from.  Among these include a lot of small, independent retailers that blend closeout buys into their total store inventory – without customers or even staff knowing any different. It’s very possible you shop a boutique that sells closeouts and you don’t know any different, as well.

Have we made you think twice about your buys or where you shop? Let us know!

How Much?

There are a variety of ways to secure orders. Choose what is best for your business.

1. Set your opening order according to total value of wholesale cost. For example, you may say that opening orders starts at a minimum of $500.

2. Set your opening order according to total case packs. Case packs refer to a certain number of specific goods sold at one price for all the units within the case. If you sell apparel t-shirts, for example, you may have a case pack of one extra-small, two smalls, one medium and two large shirts. This totals six units which equals one case pack. Make sure you are very clear as to what each of your case packs consist of. Try and keep the quantities within your case packs consistent to avoid confusion with your clients.

3. Set your opening order according to total quantity of units, such as four pieces. This is a good strategy for products with higher price points, such as art or furniture.

4. Set your opening order according to nothing. That’s right – nothing! By setting no terms, you are allowing complete flexibility in the ordering process. However, for most companies this is not an effective way to manage their time, inventory or investments. This typically only works for custom work or higher priced items and should be carefully considered before setting into place.

Who Is Qualified?

While the below points are all something to consider for your business, you should also consider which are valid for your business to put into effect.

1. Check company credit prior to producing orders for them. It is legal to check for secure credit by processing a business credit check as a vendor. Speak with your preferred credit company to secure more details on this process.

2. Confirm there is no immediate competition with your other clients that sell your product for new accounts.You may want to set in place a 1 mile rule or something of sort to keep your retail clients happy by not over-saturating their neighborhood with your product in different retailers. Depending on your product, this will vary.

3. Set trial periods for retailers who sell your product according to sell through success. If your product is in demand and you want to only be in the best retailers, it’s fair to tell your retailers that there is an expected re-order rate based on sales for them to continue selling your product if they are exclusive to that specific area. Retailers may have the best intentions to sell your product, but if they aren’t, it’s fair for you to stop shipping to them, also. Make sure you make them aware of this in advance, of course!

What About Re-Orders?

Re-orders are what keep businesses alive. It’s important for you to gain re-orders, so as a result you want to give your retailers the opportunity to get more of your product more comfortably than the first time around.

1. One out, one in. You can set your clients up with the opportunity to automatically have new product sent to them once one of their current product in their inventory is sold. Typically this works well for hard goods, such as picture frames, rugs, high chairs and other products that are not based on a specific size (such as apparel or footwear).

2. Set in place a quantity of total units or total case packs allowed for re-orders. For example, you may say you need at least two products in order to place a re-order or two case packs.

3. Set in place a monetary number for re-orders to be placed. Maybe $200 is your magic number. Whatever your number is, make sure it is less than opening orders so that retailers are more inclined to make this purchase.

4. No minimums at all! This is great if you can afford to process single unit orders (and expect this if you set this in place) and invest the time it will take just to deal with the re-order communication. Remember that it does take time, so consider this when setting up all your terms.

Extra, Extra

If you plan to charge for shipping, let your retailers know – and tell them how much as well as who is shipping your product (UPS, Fed Ex, etc). If certian colors are off limits for production reasons or re-order purposes, let them know. Anything that adds to the order terms, LET THEM KNOW! Nothing is worse than surprising your retailer with additional information that may result in lack of trust or respect and possibly severed business. Be clear on all your terms with a clean, professional document that is included in your Buyer’s Packet. Make sure to have your retailers sign a partnership contract, as well.

Finally, be open to your own unique needs. Each wholesaler is different and deserves to respect their brand and product respectively. Learn about what your competition is doing and try and be flexible with the economy, as well. One way of doing this is offering show specials to your clients (if they attend a trade show, they may get a discount, for example) or offer other incentives that can help make the sale for you. Free shipping on opening orders is always a good one.

Need help defining your unique order terms? We can help. Email nicole@retailminded.com for more details.

Just like stocks, shoes are all about assessing risk.

[tweetmeme]There’s a big difference between going with flats and pulling out your 5-inch, Louboutin curved heels. The 5-inchers are all about upside. You could crash and burn, but if the wind blows just right you could also find yourself being swept off your feet by Prince Charming. Stocks are the same way. High risk, high reward.

Also like stocks, shoes are all about style.

There’s a reason why we choose pink over purple or shaped instead of flat; because we use style as a way to express our personalities and tell the world who we are. Stocks are the same way. People like to own companies they feel an emotional connection with and that say something about their world view.

And also like stocks, shoes are disposable.

Styles come and styles go, fashion is a very dynamic environment. But that’s not your problem, because buying shoes doesn’t require a contract. Stocks are the same way. When the obsession with your favorite investment ends, you kick it to the curb and start looking for a new BSF (Best Stock Forever).

 And finally, when it comes to footwear, comfort is king.

The whole reason human beings started wearing shoes in the first place was to make life more comfortable. The same is true for stocks. Buying stocks and investing in the market is a way to smooth the bumps and create long-term financial stability.

So as you can see, if you consider yourself a whiz at finding the latest and greatest trends in fashion, you might be really good at picking stocks too. So let’s go ahead and apply those finely-tuned consumer instincts to the market and take a look at our favorite stocks out of the retail and fashion industry.

Top 4 Retail and Fashion Stocks

Coach (COH)

A familiar name to most, Coach specializes in high-end bags and accessories. This segment of the market has held up surprisingly well in the weak consumer environment of the last two years as high-end consumers have retained more discretionary spending power. But it’s not all about the upper end, Coach smartly diversified its offerings to capture a larger audience and expand into new markets. That strategy has paid off nicely, with shares up more than 50% in just the last 6 months. That means more than a few new purses for those following the trend.

Limited Brands (LTD)

This is a diversified retail play, with Limited Brands owning a portfolio of stores that includes Victoria’s Secret, Bath & Body Works and the White Barn Candle Company. Although a lot of people like to talk trash about stocks these days, this one has seen huge gains over the last two years, jumping from $6.25 in March of 2009 to its recent high above $35. For anyone without a calculator that’s a lot of bra’s and underwear.

Steve Madden (SHOO)

If nothing else, this company has the right ticker symbol. SHOO has been a hot name in shoes for the last few years, finding a very solid niche between the high and mid segments of the market. That’s a formula that has paid off for the company, with shares recently hitting a new all-time high on another great quarter. This stock has also seen huge gains since rebounding out of the financial crisis of 2008 and 2009.

Lululemon Athletica, Inc. (LULU)

Looks like selling $100 yoga pants is pretty good business. This has been one of the hottest momentum stories of the year, with the yoga craze pushing shares of LULU to fresh 52-week high after fresh 52-week high. Although a number of new competitors are moving into this space to capture the growing market, LULU still sees its best years ahead. $1000 invested 2 years ago would be worth about $18,000 today. Those are huge gains.

Shoes or stocks, there’s lots to learn and lots to spend your hard earned money on. What will you invest in next?

Michael Vodicka is the founder and President of the Vodicka Group, Inc., a boutique investment consulting firm that specializes in working with individual investors. Sign up for his weekly update at vodickagroup.com  and get more stocks picks and pointers on how to manage your portfolio.

[tweetmeme]1. Monthly fixed expenses. Yep, that’s right – fixed expenses (sorry, you just can’t avoid this in retail). You can count on these every month. Rent, phone, utilities, insurance, payroll, office supplies and much more are likely to make up these expenses. Track these expenses and plan accordingly so that you aren’t caught short of your payments.

2. Sales per month. In order to pay your bills, you need to be making sales. Track these by day, week and month. What comes in (point 2) and what goes out (point 1) each month give you your starting monthly number for the following month.

3. Negative numbers. It happens, unfortunately. If you spend more than you make, you are in the hole. If you can start your business with a savings for months like this, you can (hopefully) stay afloat without having to borrow money or sink into a deeper hole. The reality is, many new wholesale and retail businesses have a few bad months, so planning for this in advance is advised. A six months savings based on your fixed income is ideal. One year is even better.

4. Inventory buys. You can’t make sales without buying adequate product. Control your buys by using an open to buy system with a controlled amount of dollars allocated based on needs, months and current inventory. Avoid the temptation to over buy!

5. Be responsible with due dates and credit. This means never pay a bill late! And always do credit checks when planning for someone to pay you… you don’t want to eat their mistakes in poor cash flow planning.

The ultimate goal is to keep your in flow better than your out flow. Managing this is a job – and even if you love what you sell and hate doing the math to stay on top of it, you have to. Or hire someone else to do it. At the end of the day, this is what will keep your business alive.

For customized details on cash flow or to inquire about how you can get unique help on your business, contact Retail Minded at nicole@retailminded.com.

Wait. That’s not right. There’s not really love involved in paying bills… even the ones you know you need. So when times get tough or your budget gets tight, reducing your retail overhead is a must to ensure your business stays afloat.

The tips below can help you achieve a more manageable retail overhead  without compromising your business objectives. While there’s no promise you will like what you see, there is the promise this can help (at least a bit… we can’t solve all your challenges via one blog!).

1. Eliminate services you pay for but do not use. This may be two phone lines versus just one, a fax machine you rarely use or a membership to a local gym via your company account. If you pay for online memberships of any kind, consider if they are really worth it. Often you’ll find you are being automatically renewed to things you don’t even participate in anymore. These things add up!

2. Buy in bulk – even if it means paying more upfront. You’ll need paper, receipt rolls, toiletries and many other obvious supplies during the course of every work year. Rather than buy these things as you go along, buy in bulk from a warehouse store to save money in the long run. Plus, this will save you time since you only have to make a couple trips to the store versus monthly visits.

3. Give up cleaning services. I know, I know… cleaning your own toilet is a dreaded chore and certainly cleaning up one that is shared by many is worse…. BUT sometimes these cost eliminating sacrifices are what it takes to get focused on saving and making money versus spending it.

4. Let go of professional organizations that cost you money. Some networking groups are effective in building your business, while other professional organizations charge you a fee that may not be worth what you get in return. Really consider if what you pay is worth what you get from it. Then, consider eliminating this expense only if it makes sense for your business and budget goals.

5. Scale back on trade show participation… But still go.It’s essential to keep up with trade shows, new vendors and what’s hot in your retail environment, but attending every show isn’t always effective. Often it may just mean sharing a hotel room versus getting your own on a buy trip, or other times it may mean going to two shows a year versus four. Every penny adds up on these excursions, so think about each penny being spent as if it’s your last one.

While each retailer is unique in their vision, goals and budget, the above list can challenge every retailer to think about how their dollars are being spent. Next time you write a check, will it be for something that’s effective for your business, or will it be for something you could have done yourself or don’t need? Keep asking yourself these questions as your business grows, and soon you’ll have more money to spend on what really matters (even if that’s a vacation on your time off!).

[tweetmeme]Whether you are a mom and pop store or a big chain retailer, deciding on your POS system is a critical step in your retail plan. Even those of you working craft shows and managing a business from home can gain from the right POS software! From improved cash flow to better time management, things you will want to consider for a one stop/shop POS system include:

1. Inventory Management

2. Improved Cash Flow

3. Great customer management

4. Improved Sales

5. Reduced Paperwork

6. Off Site Access

7. Easy Understanding &  Navaigation of Software

8. More Time For You

So now the question is – where do you find this?

Chicago based Cashier Live is on a mission to provide low cost, high value point of sale software to independent retailers. Forget tedious hours of installation – they know you don’t have time to spare. Don’t worry about frustrating training seminars – they make learning a snap. And getting started? It’s free! You simply need to sign up for their free, 30 day trial. And because you can access your POS system online (and without complicating hardware to deal with), it’s easy to get familiar with all the fun, supportive features they offer right away.

Okay, so it sounds too good to be true. A few logistics to get it all going may dampen your good mood, but they have made it all very easy for you – promise. To learn more about Cashier Live, visit www.cashierlive.com.

Cost of Goods + Retail Markup = Retail Price

Retail Price – Cost of Goods = Markup

Retail Price – Markup = Cost of Goods

Beginning Inventory (in $ or Sku Count) + Purchases – Endoing Inventory = Goods Sold (in $ or Sku Count)

Total Sales – Cost of Goods = Gross Margin

Gross Margin $ / Average Inventory Cost = Gross Margin Return On Investment

Net Sales / Average Retail Inventory (Sku Count) = Inventory Turnover

Gross Sales – Returns & Allowances = Net Sales

Projected Sales + Projected Markdowns + Planned End of Month Inventory – Planned Beginning of Month Inventory = Open to Buy (OTB)

Units Sold / Units Received = Sell Through %

Beginning of Month Stock / Total Month Sales = Stock to Sales Ratio

The calendar known as 4-5-4 divides the year into months of 4 weeks, then 5 weeks, then 4 weeks and so forth. Beginning on Sundays and ending on Saturdays, it also ensures holidays are lined up and like days, such as a particular Wednesday, are lined up so that sales reporting can be done accurately.

As effective and beneficial as this calendar is, there is one problem that it brings to the table. It only covers 364 days. The extra one day that isn’t covered on the calendar is easily managed, though, by proper bookkeeping completed by each unique retailer. During Leap Year, though, retailers may opt to add another week to the calendar – though some retailers ignore this altogether. When a 53rd week is added, you simply push your weeks back by one to compare to the previous year. Essentially this would mean you would ignore the first week of the year. It also gives retailers and vendors a great reason to get excited – more time to meet annual sales goals!

In addition to allowing sales to be reported more accurately, there are two more valuable reasons to use the 4-5-4 calendar. The first is payroll. This calendar can help guide you in your payroll decisions and help manage your accounting. The second additional reason is inventory control. With a balanced calendar, taking inventory and tracking inventory can be done more accurately when completed routinely.  

While it’s common for large, corporate stores to use this calendar, not all independent retailers have introduced this to their stores. Most retail software systems have this calendar integrated into their systems, however some small business owners still track sales the old fashioned way (pen and paper or their own excel spreadsheet). Certainly there is not a right way to do this – only you can determine that for your store – but there are easier ways to manage your business. This calendar is definitely one of them. A great tool for retailers, if you aren’t following the 4-5-4 calendar already, you should consider how it may be helpful for you.

What Can Wholesalers Do?

The fact is, the price of many products at retail have gone down in their market value, therefore their wholesale price should reflect this. As wholesalers, if you aren’t already offering incentives, discounts or some sort of savings in your sales to retailers – you should be. Of course, this all depends on who you are. Many wholesalers are doing great or getting by because likewise, the retailers who are selling their product are comfortably moving their product. But if your product falls into the category of not making expected  sales, it’s time to help out your retailers.

What Should Retailers Do?

If you are a retailer who is struggling to make sales, consider how you can help your margins before you bring new product into your stores. Discuss options with your vendors that include discounts, incentives or possibly even product buy backs based on sales – or lack of them. Plan in advance how you will manage the markdowns customers are expecting, but also plan to make sure your customers don’t expect more markdowns to keep taking place. Buy less of more so that customers can’t wait around for what they want to still be there, but for less. And make sure your vendors know you are making these changes to support your business overhead and hopefully they will support you along the way, as well. After all, if they fall into the category of products needing to be marked down, then they should be smart enough to know it’s sell for less or don’t sell at all!

At the end of the day, as a retailer or wholesaler you want your products to sell. By supporting each other to make this happen, you can keep each other happy and ultimately – the final customer, too. But be realistic and be fair. These negotiations aren’t for everyone and retailers should respect that…. Likewise, wholesalers should respect their retailers if they don’t get reorders. Whoever said retail was easy certainly wasn’t working in it during a tough economy! Luckily, the battle is often worth the fight.