Ain’t Technology Grand?

My friend Steve, visiting Taiwan on business, posted this picture on facebook of a Ruth’s Chris Steakhouse.  It’s been a long time since I’ve been over there, but even back in the ’90s, American businesses were all over the island.  Even so, traveling to Taiwan and China was about as lonely an experience as you could imagine.

It’s not that the people weren’t friendly, not at all.  The Chinese are very friendly, hospitable people.  But it’s their home, not mine, and it’s normal to crave contact with your loved ones.  But in those days, phone calls were very expensive and we were allowed to expense only one call home per week.  Besides, there’s a twelve hour time difference between there and here.  I don’t know about you, but when I’m away from home I’m always wondering what Jan and the kids are doing.  When you’re in the Far East the answer is almost always the same.  They’re in bed.

The time change is still the same.  As I write this it’s 10:30 in the morning in Saint Louis and it’s 11:30 at night in Taipei.

But, thanks to the Internet, the communications gap is gone.  Facebook, Twitter, even video chat make instant communications possible.  A person in Taiwan can actually see live images of family and friends for just the cost of an Internet connection.  No time limits.  No bad connections.  Just instant communications.

There are a lot of things wrong with the Internet, but when it comes to staying in contact with family, friends, and business associates, there’s nothing like it.


April 15-The Real April Fool’s Day?

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Here in the heartland of America it’s a beautiful day.  As I sit here in my palatial office (actually a spare bedroom) I can hear the birds singing and almost hear the buds popping open on the trees.  All is well!

OK, maybe all isn’t well.  It’s April 15, sort of like April Fool’s Day on steroids.  As I prepare to send off a five figure check to the IRS, the beauty of the day seems to dim a little.  Maybe the birds aren’t singing.  Maybe they’re laughing at me.  It’s hard to say.

I don’t mind paying my fair share, I really don’t.  But my fair share was withheld from my IRA distributions throughout the year.  Yet, I still owe almost twenty grand because someone at my former employer didn’t feel the need to inform me that there would be a huge tax liability at the end of the year.  “Oops.  Sorry.”

It’s quite a hit for someone who didn’t actually earn a dime in 2009.

Then there’s my second son.  He owes $1,000.00.  That may not seem like a lot to you and me, but this young man made less in 2009, working two jobs, than I paid in taxes.  Like his old man, his tax liability is the result of someone at one of his employers dropping the ball.  In spite of his several requests, they failed to withhold taxes from his salary.  “Oops”, again.

I know many of you have similar nightmares and I guess having a blog gives me the opportunity to rant once in a while.  Here’s the thing, $1 billion of the “stimulus” money is going to hire thousands of new IRS agents.  Why?  Because a lot of us have had it up to here with a government that thinks our hard-earned money is somehow their money.  Because all of us, especially small business owners, feel like we contribute more than enough to Washington, our state capitals, counties, and municipalities.  Face it, most of us don’t trust the government.  By hiring thousands of additional IRS agents, the feds are making it painfully obvious that they don’t trust us either.

We’re shocked that the word “million” seems to have almost vanished from the national vocabulary to be replace by the word “billion” (1,000,000,000).  [Note:  “Millions” of Americans are out of work.  That seems to be the only place the “M word is still in wide usage.] Trillion (1,000,000,000,000), a number so big that most Americans can’t even comprehend it, is thrown around ever so casually by a government that acts like there is no limit to what you and I can be forced to pay.

I don’t mean to get all political on a business blog, but whatever we contribute to the government is money that we can’t use to build up our businesses.  And if we can’t build up our businesses, where are we going to find jobs for the millions of our friends and neighbors who are out of work?  Besides, this isn’t a liberal or conservative issue.  Both sides treat our paychecks like Monopoly money.

But, take heart, Tax Freedom Day occurs at about the same time as Tax Filing Day.  That means that everything you’ve made so far this year will go to pay the various taxes but what you make from now until the end of the year is yours.

Is it a coincidence that our tax day falls on the anniversary of the sinking of the Titanic?  I don’t think so.

Retail Business “Killers”

Today I want to point you to an article called “The Top Five ‘Killers’ of Retail Businesses” from the Retail Owners’ Institute.  You have to keep in mind that the ROI is a group focused on the financial aspects of retailing.  Consequently their “Top 5″ don’t include things like marketing, salesmanship, customer service or any number of other things that would appear on my list.  In fact, the article begins with this rather remarkable statement”  Hint: (Declining Sales’ is NOT One of them!)

Again, these guys are in the business of counting retail beans so their list focuses on the financial.  With that disclaimer, here are their “Top 5”:

5.  Out of Control Growth

4.  Out-of-Control Expenses

3.  Failing to Manage Gross Margins

2.  Out-of-Control Inventory

1.  Being Out of Cash

Like I said, from the bean-counter’s perspective there isn’t much to argue with here.  There’s no doubt that if you run out of cash, you’re most likely out of business.  Read the original article to see ROI’s comments on each business killer for some good insights.

It’s a good article but, in my humble opinion, it misses some very important elements of a successful retail business.  Even the most devout bean-counter should be willing to admit that until you bring the beans in through the front door, the rest is just academic.

Keep an Eye on Your Stuff

One consequence of the weak economy and high unemployment numbers is that we can expect an increase in shoplifting, especially during the upcoming holiday season.  Unemployed people, desperate to give their families a decent Christmas may resort to giving themselves a "five-finger discount" rather than show up empty handed on December 25.

While we certainly can empathize with unemployed or underemployed husbands, wives, moms, and dads, (been there!), we can't condone thievery, either by customers, or worse, by trusted employees.  It's always important to be aware of what's happening in your store, but extra vigilance is always necessary during the holidays, especially this year.

Here are links to some excellent articles on the subject of theft prevention.


EMPLOYEE THEFT  This one contains some additional links.  

There one more thing and that's customer service.  A customer who's receiving excellent service doesn't have a chance to steal from you.

Ya Wanna Trade?

Trading goes back to ancient times.  Before there was money, merchandise and services were exchanged for other merchandise and services.  In fact the earliest merchants were called "traders."  Even here in America in the early 20th century, it was fairly common for the local family doctor to take care of a patient in exchange for food or other items.

Trading is enjoying a resurgence as money gets tight and credit gets tighter.  "Barter exchanges" are clearing houses for trades between businesses.  For a small fee, they convert your excess merchandise or services for " barter dollars" which can be used to get things from other members of the exchange.

Writer Jorina Fontelera points out in a post from "Thomas Net" that some barter exchanges are enjoying double digit increases in business. 

In addition to being a way to obtain merchandise and services without a cash investment, barter exchanges can be an ideal way to turn obsolete merchandise into something you need.  Since barter transactions take place at "fair market value" (retail), in effect you're buying goods and services at a wholesale value.  For example, if you trade a $100.00 retail value item that you bought for $60.00, you're going to get $100.00 retail value in return.

Since members know that they're enjoying substantial savings, they're not likely to be too concerned if the item they're getting is a 2009 model or a 2007.    Of course you can avoid the barter fees by just asking your neighbor if he wants to trade a copy machine for a vacuum cleaner.  Simple.  Direct.  No paperwork.  It's a win/win.

Fontelera points out that you should be careful who you're dealing with.  Make sure the exchange is reputable or you might end up with a worthless pile of "barter dollars".  You should also make sure that there are members in the exchange who have things to offer that you want.  Having bartered in the past, I can tell you that there's nothing more frustrating than having a big balance in your account and nothing to spend it for.  Until you get the hang of this barter stuff, don't run up too big a credit balance.  $5,000.00 worth of hockey pucks might not be your cup of tea.  $5,000.00 worth of tea might not be your cup of tea.  As with any new business venture, be careful.

Check out International Reciprocal Trade Association (IRTA) before you hand over merchandise.

Saving Money on Expenses

There’s an interesting article on yesterday’s INSIDECRM web site called 78 Ways for Your Small Business to Save Money in this Economy.  People love lists, and this one is pretty good.  While we don’t necessarily agree with all 78, some of them are very creative and could save you some money.  Some highlights:

1.  Go green, an overworked term if there ever was one, but as we’ve discussed here before, there are definitely a lot of ways for you to save energy which means saving money.

There are a number of computer-related ways listed for you to save money but MYOB advises caution on number 9.  Buy recycled printer cartridges.  We’ve personally never had any luck with recycled cartridges.  They often don’t work and could void the warranty on your printer.  Use caution on this one.

Number 12, points out that you can save 50% by turning off your computer at night.  Of course number 7 suggests that you set up your computer to answer faxes, so I guess you have to choose one or the other.  One thing that we weren’t aware of, according to number 15, laptop computers consume 90% less energy than desktops.  Not bad.

We’ve posted on number 25 in the past.  Hire college students or interns for credit.  You can land some pretty good people for not much money this way.  For example, I know of a young man, thirty years old with a Master’s Degree in counselling who’s working in retail during the day to pay the bills while he teaches at a university in the evenings.  Not only does he work cheap, but his background in psychology is very helpful in a retail environment.

Another tip that we take exception to is number 28, "Don’t pay retail."  If you want your neighbors to buy from you, you’d better buy from them.  Nothing says you can’t cut them a deal to get a deal in return or that you might even be able to barter for some of the things you need.  But buying on Craigslist as the writer suggests could end up costing you in the long run.  On the other hand, number 32, "buy used equipment" isn’t a bad idea, especially in a down economy.  You can always come back later and buy new.

This won’t save you a ton of money, but it’s still a good idea.  Make your bank deposit early in the day (Number 55).  Your money doesn’t earn interest sitting in your safe.  By the same token you may be able to get a cash discount from some of your suppliers (Number 64).  It doesn’t hurt to ask.

Check out the article to see the complete list.

If you have any suggestions on how to save money, why not share them by commenting below? 

Oh, and don’t forget to turn off the computer and the lights when you’re done.


I suppose that if anyone has a right to feel down in the current economy, it would be real estate agents.  But Chris Johnson, writing at the Bloodhound blog is taking a positive approach.  He lists five positive things that his fellow agents can do to survive the current downturn in the business.  If his tips will work for real estate agents, there’s no reason why they won’t work for you.

  1. Ruthlessly Control Your Personal Spending.  Now may not be the best time to buy that new BMW.  According to Chris, in the real estate business $100 saved is $150 earned.  You know your own situation and the numbers are probably different.  But the logic is sound for any business person.
  2. Control Your Environment.  Simply stated, clean up your work space.  You’ll feel better and it will be easier for you to work. 
  3. Lead Generation = 35% of your time, minimum. Finding new prospects isn’t just a concern of real estate people.  You know what your closing ratio is.  Getting more people through your doors should be your number one priority.
  4. Have Your Head in the Game and not in Your……..  Act successful and you’ll be successful.  Turn off the talk shows and turn on some uptempo music.  As Chris says, "Just walk away from idiots and zealots.  Don’t focus on the [bs], focus on the opportunity.
  5. Define and Seek Peak Experiences. This is an interesting one.  Make a list of cool things you’d like to do and do them.  They don’t have to be expensive, just fulfilling.  Chris says, "Figure out what your happy memories are and go make more."

Let your competitors wallow in self-pity.  Let them whine and complain about how tough things are.  Just don’t join them.  At its worst, our US economy provides more opportunities to make money than many country’s economies at their best.  Like Nike says, "Just do it!"

If you follow the link to the original post, be sure to read the comments.  (Some blogs have lots of comments. (hint, hint))  There are some good observations there.

Also, thanks to Matt McGee for the heads up on Chris’ article.

Small Business’ Top 10 Complaints

The National Federation of Independent Business recently polled 3,530 of their closest friends asking them to identify their biggest concerns.  Their top ten choices were:

  1. Cost of health insurance
  2. Cost of fuel
  3. Federal taxes on business income
  4. Property taxes
  5. Tax complexity
  6. Unreasonable government regulations
  7. State taxes on business income
  8. Cost of inventory and supplies
  9. Electric rates
  10. Workers’ compensation costs

There seems to be a pattern here.  Five of the top ten (highlighted) are directly related to the government.  You could make a good argument that the government is at least partially responsible for the other five as well.

We generally try to put a positive spin on everything here at MYOB so hopefully it will encourage you to know that everyone else worries about the same things that you do.

In case you missed it, the federal minimum wage increases to $6.55 per hour this week.  But since payroll expense isn’t one of your top ten concerns (according to the survey) and since you probably aren’t paying minimum wage anyway, it shouldn’t add to your worries.


We’re all looking for ways to cut expenses.  We’ve posted here before on some tips to trim everyday expenses, but the largest expense item for most retailers is inventory.  How do we reduce inventory expense without hurting sales?  As Bob Negin points out on his Whiz Bang Tips site, that’s the $64,000 question. 

If you have too much inventory, you’re wasting money.  If you have too little inventory, you’re losing sales.  Hitting that happy inventory level that generates the most profits isn’t easy.  One measuring stick is turnover.  If you bought enough inventory on January 1 to last all year, then your turnover would be one (1).  If you bought enough inventory at the beginning of each month to last thirty days, your turnover would be twelve (12).  For most businesses, the ideal figure is somewhere in between.

This chart from Bob’s post gives a rough idea of average turnover rates for various types of stores.



But, turnover isn’t the only metric for retail stores.  It’s important, but it’s not enough.  You have to look at other factors.

For example, take a look at the chart.  If a lumber yard can make 7.7 turns, how can an antique store survive on 1.7′?  There’s another number to consider.  It’s called gross margin.  Here’s a very simple example. 

Let’s say you carry two items, A and B.  You stock just one of each.  They both cost you $100.00.  You can turn item A ten times per year.  You can only turn item B five times per year.  But you sell item A for $125.00 making 20.0% gross margin..  You sell item B for $200, making 50 % gross margin.  Let’s do the math:

item A $100.00 .20 10 $25.00 $250.00
Item B $100.00 .50 5 $50.00 $250.00

If you look only at turnover, item A looks like the better one to carry.  If you look only at gross margin, item B is the winner.  But the reality is that they’re both the same.

You have a lot of money invested in your business.  At the end of the day, you expect a return of that investment.  There are a number of other measurements that you can use to chart your business’ performance, but turnover and gross margin, when used in combination, are a good place to start. 

Upon Further Review

Maybe compact fluorescent bulbs aren’t such a great idea after all.  I had barely hit the "publish" button for Wednesday’s blog on saving money by using CFLs when I came across an article by Elizabeth Weise in USA Today about some of the problems associated with them.

According to Weise, only 11% of consumers have at least one CFL in their homes.  Some of the drawbacks?

  • Some people remember the first generation of the bulbs which put out a strangely-colored light.  While they still only give off light that’s about 80% as true as natural sunlight.  Bulb manufacturers are working on the problem.
  • The don’t start up at full brightness.  It can take up to a minute for them to reach full output.
  • They don’t like hot or cold.  Below 30 degrees, they take even longer to heat up.  High temperatures cut into bulb life.  Putting them into enclosed fixtures can cut their useful life by as much as two thirds.  Even so, a CFL that lasts 3,000 hours compared to its normal 10,000 is still a big improvement over an incandescent that lasts only 750-1,000 hours.
  • To get higher wattage in a CFL, the bulb has to be bigger.  A lamp that can take a smaller 60 watt bulb may not be able to hold a 120.
  • A lot of the CFL bulbs wont work with a dimmer or in a three-way fixture.  They make noise, they burn out quickly, and they may not dim.
  • There are some concerns about disposing of CFLs which contain mercury.  You don’t have to call the EPA, but you should wear plastic gloves to pick up the pieces of a broken bulb.  It may contain from 1 to 5 milligrams of mercury, compared to the 400 milligrams of mercury used in older thermometers.  There is no national program to dispose of used CFLs, but there are local programs in some areas.

So, what’s the bottom line, Mr. Wizard?  I’d say my earlier suggestion to replace incandescents with CFLs still applies.  Their short-comings are minor compared to the amount of electricity (money) you can save.  Unless you routinely keep your store temperature below 30 degrees, or above 80, you shouldn’t have a problem.  Besides, if you keep your store temperature below freezing, you’re already saving plenty of energy.  Let’s not get carried away.