If you've read Making Money Is Not Illegal, Immoral or Fattening, you've discovered how devoted my coauthor Art Freedman is to helping small to midsize retail businesses succeed. Here's what Art says on page 26 of the book about the importance of knowing your numbers.
"What is the biggest problem for owners/operators of small to midsize retail businesses? Too many small business retailers do not spend any time working on their financials. When they take a hit in margins, they're not aware of it until it's too late. A lot of them don't take inventories, they don't know what their shrinkage is, their expense base is going up, and they're not taking the increases in their expense base and passing it on to the consumer, and they don't have a bottom-line profit goal, and they don't even know how to figure out what their bottom-line profit is.
"Do you know why small business retailers do not budget? What we fear, we stay away from. No one ever took the time to train the small business owners on how to budget and no one makes them budget, so because they are not educated and no one is asking them to budget , they just do not do it.
"Think about the end of last month in your business, as you were getting ready to go into this month. The week before you went into this month, did you sit down to look at what you wanted to happen? Coming into the new month, did you have a pretty good idea of how much your final gross margin was going to be? How much your expense base is? Did you subtract your expense base from your final gross margin to determine if you were going to make any money for the month?"
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