Planning for Success this Fall - Part I

This issue of Retail Jewelry Insights™ is the first of a two part series that will discuss retail planning for small and medium sized jewelry companies.  Part I will focus on the concept of planning and building the financial plan.  Part II will discuss merchandise planning and its relationship to the firm’s financial objectives.

Planning as a Competitive Advantage
Almost all managers develop some kind of plan for their business.  Frequently, the plan is little more than a proforma year-end P & L and a balance sheet prepared by the firm’s accountant after the annual audit.  In other instances, department sales and basic cost centers may be calendarized by fiscal quarter or calendar month, forming an operating budget against which actual performance can be measured, while large jewelry chain store businesses may plan thousands of distinct costs as well as sku level sales and margin.  Regardless, after years of developing retail plans for different kinds of jewelry businesses, what is clear is that most jewelry firms under plan their business, which can have both short and long terms consequences for the growth of the firm.

Short-term, under planning usually means management does not have enough information about how the business is performing to make the necessary corrections to maximize profitability.  Think of it like dead reckoning where the captain navigates with only a compass, without any interim fixes to establish his actual position relative to his destination.  Longer-term, the absence of adequate planning techniques increases the risk of failure as the business grows and becomes more complex...