Retail Observer

RETAILOBSERVER.COM JULY 2022 62 I was browsing an online forum for appliance servicers recently, where folks were going back and forth about the fair and proper price to do job XYZ. The prices under discussion were all fair, but one was dirt cheap and far below the cost of doing business. The member with the below-market price said something like, "I don't know how you all can sleep at night!" Thus insinuating that the others were ripping off their customers. Several people tried to help him understand the real cost of doing business, but he didn't get it. Finally, I posted: "He Doesn't Know What He Doesn't Know." He really didn't know his own cost of doing business! The majority of us started as one-truck operations. We figured "If my idiot boss can do it, then I can do it better." We purchased a vehicle and business cards and invoices and hung out a sign announcing that we were in business, basing our prices on the going rates in the market. Some of us got lucky. Many small business owners aren't aware that 80 percent of U.S. businesses fail within the first 18 months, and that one of the main causes is poor financial management. Despite these dire statistics, many owners want to go at it alone when it comes to managing their business finances. Recent data show that 53% of small business owners don't use an accountant at all, and 27% of these simply use pen and paper to keep track of their finances. Other business owners just turn over a pile of receipts and books to the accountant once a year and hope for the best. The problem with that approach is that if you have a serious issue, you'll be at least a year behind when you start trying to fix it. At my company, we meet with our accountant for two hours every month to compare the numbers from previous months, quarters and years so that we can spot trends, good and bad, and get ahead of problems before they have a chance to become problems. Sitting down to review the numbers regularly, I believe, is one of the most important things a business owner can do. You're looking at every department and scrutinizing the historical numbers and planning for the future numbers. These reviews are important because they provide a sense of direction and help you outline measurable goals. Knowing your numbers is a compass in your toolbox that will help guide your day-to-day decisions, evaluate your progress and change your approach as needed while you grow your business. You simply can't grow your company efficiently unless you know your numbers – it's essential for building a foundation that can weather the highs and lows over the long haul. The numbers don't lie. Sure, sometimes they can be sickening. But it never pays to behave like an ostrich and stick your head in the sand. Would you bet on a horse without knowing the horse's performance history? No – you'd be throwing your money away. Yet you're doing the same if you don't know your business's numbers and stats. You need to know the data before you can make informed decisions. YOUR ROADMAP TO BECOMING FINANCIALLY LITERATE: Join Trade Associations. The benefits of a trade association include training, certification, networking, trends, advocacy, collaboration, inside opportunities and access to resources. • Attend Trade Association Meetings. Specifically, attend classes that will increase your business and financial savvy. • Join a PEER Group. Peer groups are safe spaces to talk through your day-to-day business issues. Most groups will share actual financial data. • Read. Start with easy reads like Small Business Finance for Dummies or the Ugly Truth series by Ruth King. Ask your colleagues what they've read that made an impact on their business. • Use the UASA Cost of Doing Business (CODB) Calculator. This is probably the easiest and best tool to help you answer the question: "How much is it costing per hour and per tech to keep the doors open? YOU DON'T KNOW WHAT YOU DON'T KNOW S E R V I C E D E P A R T M E N T Thomas J. Kissane Tiger Mechanical Services Tiger Cool Box Rentals/Sales RO

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