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This is more than just seeing the glass half full or empty.
It is an observation about thinning the herd.

Tom Shay
Profits Plus Solutions
February 2017
Volume 18 Issue 3
The annual ritual of thinning the herd of small businesses; it is a good thing!
Just after our January newsletter was sent to you, the annual announcement of business closings was made by all the various guilty parties. I say guilty because they are guilty by not remaining relevant to their target customer. (That is if they knew who their target customer was)

Macy's announced 68 closings. Sears/K-Mart announced 150 closings. Others with closings of locations in excess of 100 include Aeropostale, Chicos, Children's Place, Office Depot, Jos. A Banks and even Wal-Mart.

Some of you who have written to ask for comments have expressed concern and viewpoints that this is a sign of the drones of Amazon taking over retail.

We see it differently as the headline states. Let us add a couple of facts to why we see it as good news. In the United States there exists 50 square feet of retail space for each individual. That is a lot of space and it looks even better when you consider those who cannot shop for themselves be they infants or elderly.

By contrast, in Europe there is only 2.5 (that is two and one-half) square feet of retail space for each individual. While we do not know if the Europeans have it right, we can definitely say that the USA has too much.

As an example, in our city of 250,000 the one Sears, located in the mall is closing. Already announced to take all of that space is a sporting goods retailer. Walking distance to this mall is the empty space that was once a Sports Authority - a retailer that has closed all of their stores.

Our point is that the only thing more stores creates is fewer sales per square foot. Next month we are going to discuss that drone from Amazon, but for now I think the thinning of the herd is beneficial to those businesses who have correctly identified their target customer.

Revisiting the sound of silence

Last month we featured an article titled, "The Sound of Silence". It was not based on Paul Simon's song, but was instead illustrating the challenges customers can have in a brick and mortar retail or service business. The article was based on personal experiences.

This month, we share a follow up story titled, "Eliminating the sound of silence". These are some of our favorite things we would like to hear as a means of customer service.

Originals - Book of the Month

January 2004 was when we first added the book suggestions to the e-retailer. That means this month is our 158th suggested reading. There are several books that could be thought of as being "favorites". This month's book is from our favorite category of books which we will call, "thinking to the contrary".

"Originals: How non-conformists move the world" by Adam Grant. An example of understanding different people from the book comes in asking, "Which browser does an individual use?"

The answer, which we are not going to share, gives insight into the effort an individual puts into problem solving.

Operating Expense as a Percentage

Someone I have worked with has had a big challenge to their business; a lot of the products they have previously sold are no longer available for sale. This business owner is struggling with the exercise of deciding what to do with their business.

Can the business survive without their main group of products? Along with losing the opportunity to sell the products, they can no longer provide service to these same products.

Their choice is to either find new products or to determine if the business can survive without these products and services. One of the exercises I have challenged them to perform is to determine just how much in operating expenses does the business need to have.

On the income statement this is determining what are the operating expenses as a percentage of sales or revenue. The essence of the exercise is to determine how much of the expenses can be removed from the business. Once the exercise is completed you get a number that you compare to the gross margin. To remain in business, there has to be a smaller operating expense percentage than there is a gross margin.

Here is a link to the calculator we have created.

Staff Incentive for Your Business

We have always been advocates of incentives for the staff. First hand, we have seen the results; ordinary people become extraordinary people with the right incentive. And for those employees for whom nothing inspires them to excel, these people need to leave your employ and go to work somewhere else.

What about you? There are surely things you need to get done; they have been on your mental or written list for a while and can't seem to move from plan to completed. What if you were to dangle a carrot in front of yourself?

What if you started the day with a list of things you need to get done? If they are completed, when you leave your business at the end of the day, you will go home and do nothing for the business that evening; just enjoy yourself.

The incentive could be treating yourself to a long lunch; taking a day off; or anything that you will enjoy.

Incentives do work; how about one for you?

We want to recognize A Carrot A Day by Adrian Gostick and Chester Elton, whose book provides the basis for each month's incentive idea.

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Profits Plus Solutions, Inc.
PO Box 1577
St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179