Greetings...

Today's Business Tips covers Accounting and Administration and will be in two parts.  By using some cost-saving tactics, the resultant savings go right to the bottom line - in your pocket for most of us.  We have been using tactics like this for over three decades, and they work.  Watch your pennies, and the dollars will watch themselves.

List member Pam Danziger gives us some information on the luxury market, and how the affluent just want to have fun.  So, if you are selling to that market, this report should be of interest to you.  Now, let's get to everything for the retailer.

Sincerely


George Matyjewicz, PhD
Chief Global Strategist, GAP Enterprises, LLC
 

Unique Products... 

Tips...

Over the years, we have helped many companies grow profitably, using simple, common-sense tactics for cost savings that go directly to your bottom line! And it’s the little things that count - a ten percent increase in profit is more likely to come from twenty things that contribute one-half percent each than from one thing that gives you the full 10 percent.

Larger companies are forced to tighten up controls because of the Sarbanes-Oxley Act.  However, smaller companies should also strive to tighten controls.  Let's look at Accounting & Administration (part 1):

ACCOUNTING & ADMINISTRATION (Part 1):

1. Improve Collections. This tip comes from my partner (both life and business) Phyllis. Rather than wait for a bill to be past due, call the customer the day before the payment is due (or the day before they process payments) to be certain they received your invoice and that it is scheduled for payment. If they haven’t received it, tell them you will fax it to them immediately. This trick alone is how she has improved collections from 120+ days past due to 45 days (94% current) at a major importer.
   
   And deposit daily! Take advantage of the short-term interest on your deposits.

2. International Payments. While it takes an average of 42 days to collect payment from U.S. companies, it is much slower in other countries. The average days outstanding on receivables in other countries: Iran 310; Syria 175; Kenya 143; Ethiopia 138; Argentina 121; Uruguay 120; Tunisia 116; Chile 109; Ecuador 107; Cameroon 106; Morocco 105; Algeria 103. So, if you do business there, you better adjust your prices to reflect these slow collections.

3. Accounts Payable. With each vendor, work out an agreement to delay payments or spread them out. A long payout over one year can be secured by a note and will reduce your accounts payable on your balance sheet (it goes under long-term obligations). This improves your working capital position, which makes your lenders or investors happy.

4. Improve Cash Flow. By improving cash collections and delaying cash payouts you have improved cash collections. Let’s look at an example. Assume your sales are $3 million and you have 120 days in accounts receivable, or $986,301. Improve it to 45 days and you reduce it to $369,863, which is a cash flow improvement of $616,438. If you delay payments to vendors to 45 days instead of 30, you could improve cash flow another $123,287 on payables of $1 million. That means you have improved cash by $739,726!
   
   And, if you still need to improve cash, consider factoring your receivables, which is very common in the fashion industry. If you sell to customers who have good credit, you borrow against the receivables or sell them outright.

5. Save Pennies. Reduce costs wherever you can. With a business, you have five major areas of costs: 1) Labor; 2) Rent; 3) Inventory; 4) Equipment; 5) Marketing. Save on the operation costs like rent and equipment, and you have more to spend on the things that make you money – inventory and marketing.
   
   Before you spend a lot of money on fancy offices, fixtures or state-of-the art technology, consider other, less expensive ways. Fixed expenses don’t make you money!

6. Reduce Cost Of Your Office Supplies. Go through your past invoices and highlight the office supplies that make up 80% of total dollars spent. You should focus on only the top 20%--those items you always need to have on hand. Then, contact three vendors and get bids on those specific items. Let them know you're shopping for the best deal. If you include a superstore (i.e., Staples, Office Max, Office Depot) in your survey, account for the costs of an employee's time to get the supplies, if you don't shop online.
   
   Compare prices with online or mail-order companies. Ask questions: What is the minimum order allowed? Who pay the freight charges? Do they have an 800 number to place orders? Who pays the return freight if there are problems?
   
   Centralize the purchase and location of office supplies to improve inventory control and reduces redundant purchases. Work with your supplier to develop "just in time" inventories where the supplier manages the inventory and restocks as needed. Often, orders can be delivered within a day.

7. Telephone Control. Make sure you are getting six-second increment billing with no minimum per call. Some long-distance carriers will charge you a full minute even if your call is only 18 seconds in duration. The shorter your average call, the more you'll save by having six-second billing. With voice mail and faxes being so common, the average call is getting much shorter. Studies have shown that six-second billing can save you around 10 percent on your long-distance bill. Competition with telecoms is becoming fierce. Some are now using the mobile telephone billing concept - flat fee for "x" minutes anywhere.
   
   If you have more than a dozen telephone lines, you may be able to save money going to a system that uses trunk lines and shares them among different facilities. Rather than pay separate charges on each telephone line, this allows you cut line charges.

Next we will cover more cost-saving tips on Accounting & Administration to help improve your bottom line.

Members Posts...

Luxury Consumers Just Want to Have Fun

Luxury consumers primarily pursue their luxury lifestyles in order to maximize their personal enjoyment and pleasure. This is the key finding in Unity Marketing’s most recent investigation into the importance of a range of motivators that drive luxury consumers in making luxury purchases. A total of 1,012 luxury consumers were surveyed in July 2006 with an average income $147.9k and average age of 43.4 years.

Over half of the luxury consumers (52 percent) reported that enjoyment and pleasure was very important when it came to making their most recent luxury purchases, including both luxury goods and experiences.

What luxury marketers and retailers learn from these findings is that they need to keep the consumers’ joy and pleasure front and center when it comes to positioning their brands, developing marketing messages and designing their products.

 

Luxury Purchase Motivators Rated Extremely Important
Enjoyment & Pleasure	52%
Enhances Quality of Life	39%
Special Treat	38%
Expresses My Personal Style and Who I Am	35%
Personal Enrichment	35%
Reward for Hard Work	34%
Way to Reduce Stress	29%
Makes Me Feel Special and Unique	29%
Adds Beauty or Excitement to My Life	28%
Deepens My Relationship with Family	28%
Uniqueness	27%
Provides Meaning in My Life	22%
Sharing with Friends	21%
What Is Expected of Me at My Stage of Life	13%
Exclusivity	13%
Status	9%
Social Standing	7%

 

Of far less importance as a motivator for luxury consumers in pursuit of their luxury lifestyles are factors, such as exclusivity (13 percent rated this very important and 59 percent said it was unimportant or not needed); status (9 percent very important and 71 percent unimportant or not needed); and social standing (7 percent very important and 73 percent unimportant or not needed).


Unity Marketing publishes its Luxury Tracking Study quarterly with the next due in September/October 2006. For more information visit http://www.unitymarketingonline.com/reports2/luxury/luxury3.html
 

Pam Danziger, President

Unity Marketing

717-336-1600