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August e-reta@iler newsletter features:
* Cost of goods sold- Calculated the correct way
* Promoting: Got your crayons?
*Trust me, I'm lying - a 'different' book recommendation
* Article of the month: Owners, managers and entrepreneurs
Join us for August 16: e-retailer conversation conference call
with special guest - Linda Cahan

August 2012
Volume 13 Issue 9

Article of the Month

Owners, managers, and entrepreneurs
Tom Shay

In 2011, I had my last opportunity to be on a program with George Whalin. I have always found George to be a fascinating person to listen to as well as a very insightful man when it comes to retail. Today, I am among the many that miss George as he passed away earlier this year.

The article for August is based upon comments George made during our last visit. My invitation to you is to take a slow and attentive read of this month's article. You are one of the three individuals named in the title; but which one are you?

Which one do you want to be? And if it is different from the one you currently are, what do you need to do to make that change?

Click on Article of the Month to read this article.

Book of the Month

Trust Me, I'm Lying: Confessions of a Media Manipulator
by Ryan Holiday

With the book of the month for August, I am taking a 'walk on the wild side'. For the past 13 years, all of the books have been very targeted to you, the small business owner or manager.

This book is different. Ryan Holiday wrote the book based upon his experience with an experiment he conducted.

One example of his experiments is a website known as HARO; it stands for 'Help a reporter out'.

News reporters are invited to submit their needs for information in an email that goes out to thousands of 'experts' every day. Each of the 'experts' are invited to respond to the query by helping the reporter gain information for their news story.

The 'experts' are invited to subscribe to this newsletter, filled with paid advertising, so they can get their name in the media as being an expert.

Holiday reports that he found that most reporters wanted the 'expert' to write the news story for them. So Holiday decided to see what he could get by with. He became an 'expert' in many areas. He reports that few reporters questioned anything he wrote for them and gives examples of areas he has been quoted as an expert while having no real expertise with the topic.

I nominated this book for August to give you some 'lighter reading' and to help reinforce my comments about the 'boo birds'. Next month I will get back to the usual good small business books.

Click on Book Referral to see the list of small business books we have found that may be helpful to your business.

e-retailer conversations

Hey, we are blogging, tweeting, facebooking and invite your participation.

Visit our e-ret@iler conversations, find the category of interest and post your comments, questions or best practices. You may also go directly to one of our categories by clicking on one of the links below.


Employee Issues

Financial Management

General Discussion


Sales Techniques

Vendor Issues

And you can follow my daily posts on Twitter and Facebook.
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P.O. Box 1577
St. Petersburg, FL
33731 USA
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Business Advisory

The 'Boo Birds' are back!

You would think that in the US, that the media would be focusing on the presidential election for the next 90+ days. Unfortunately, the 'boo birds', also known as the media seem to be wanting to turn a part of their attention to another potential recession.

It reminds me of the mention of a certain economist who was described as having accurately predicted 15 of the last 3 recessions.

For readers not in the US, please use this as a warning as should those here in the states.

The media has a challenge; people do not read papers, watch TV, or listen to radio as they previously have. The media has to generate attention somehow to get people to 'look, listen, and read' them.

When you pay attention to what they are saying, their 'stinking-thinking' has a way of getting into your head. Let me suggest you put down the paper, turn off the TV, and listen to some music instead of investing your time in the media. Read a book about business. Invest in yourself. Do not pay attention to the 'boo birds'.


The August e-retailer conversation conference call will be Thursday, August 16 at 8pm eastern. Our guest for August will be Linda Cahan, an internationally recognized expert in visual merchandising with over 25 years of marketplace experience. Linda’s breadth of experience has included all segments of retail including: fashion, technology, tools, gifts, accessories, furniture, independents and corporations.

We are going to talk about ways to make a showroom look great without spending everything you have. We are also going to discuss an issue that I have been asked about multiple times.

When I do not have enough inventory to fill my business, how can I make it look full? We will be sure to pose this question and those you send to Linda Cahan, our guest for August.

Here is a link to learn more about Linda Cahan.

Last month's conversation had Dave Doucette as our guest. As Bill Kendy and I visited with Dave, we explored the partnerships people create in owning their business. Dave shared the signs of when the partnership is failing and when it is time for a 'divorce'.

If you were not able to join us for the July call, you can listen to it, and almost all the other calls from the past four years, by following this link. You can download them to your mp3 player or listen to them from the convenience of your computer.

E-ret@iler conversations

August e-retailer conversation conference call
8pm eastern, Thursday, August 16, 2012

You will receive an email announcement about four days before the August conference call, and again on the morning of the call.

Internet Tip of The Month

Cost of goods sold

While there are many aspects of the financials that are not understood by small business owners, this month's Internet Tip of The Month has to be at the top of the list.

When I have the opportunity to look at a 12 month profit and loss statement for a business, one of the first things I want to check is the cost of goods sold.

It is directly related to the gross margin as you take the cost of goods sold and divide it by gross sales to determine the gross margin.

In most cases it should be expected that the gross margin would not fluctuate very much from month to month. When it does fluctuate, I become suspicious as to the accuracy of the profit and loss statement. The problem is usually found in the cost of goods sold because they have not been calculated properly.

There are three ways to calculate the cost of goods sold. Today the most common way is your having a point of system that has every item listed by an individual item number along with the cost and selling price.

Some businesses have most items tracked in this manner, yet they have a few that are sold as a 'miscellaneous' item. In this situation, someone who programmed your inventory control has gross margins assigned to them. Of course, in this situation, what you have is a 'guess'.

The old style, but still accurate is to know the cost of the inventory at the start of the accounting period. Then add to that all of the inventory received (this is different from inventory paid for) during the accounting period. The last step is to subtract the inventory on hand, at cost, at the end of the accounting period.

Unfortunately, too many accountants use the amount of checks written for inventory as a part of this calculation. This is not correct. Want proof?

Take any month and during that month do not pay for any inventory. That would mean your gross margin is zero. Take any month and during that month write checks for $100,000 for inventory while having sales of $50,000. This would mean your gross margin is a negative number. Neither of these scenarios can happen.

Look at the name - Cost of Goods SOLD. It is not cost of goods PAID FOR, or anything similar. The cost of goods sold is a direct result of what you have sold during the accounting period.

Use this calculator and my explanation to help you understand this important factor of your business.

Cost of Goods Sold Calculator

The Power Promoting Idea of the Month

Get your crayons ready

The small business owner that shared the power promoting idea for August reports that regardless of how they change this promotion, it always works.

They have a children's coloring contest. The business partners with a vendor to create a coloring page which will have the products/services of the vendor as a part of the picture that children are invited to color. Of course, the picture prominently features the business that is promoting the event.

Sometimes the business will partner with schools in the area; some times they partner with pre-schools. They provide the page to be colored to the children with the winners being announced at the business. As the children complete their works of art, the art is returned to the business which posts the art through out their business.

Of course, parents, family and friends want to come by to see the art. Sometimes the business employees are the jurists for the art competition; some times the jurists are volunteers from the community.

The prizes given are as varied as the versions of the contest that have been described. The judging criteria would include 'best within the lines' and 'most creative' along with judging according to age. This idea works for all kinds of businesses.

You can find more ideas like this in our promotions books. You can order your copy by clicking on the link below; each book is only $9.95 plus postage.

Profits Plus Resource Center


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St. Petersburg, Fl 33731
(727) 464-2182
Fax: (727) 898-3179