Small Business Resources
By Dan Jablons, Retail Smart Guys
You know it’s coming. Any day now, you’ll get the email or the phone call: “It’s time to talk about your taxes. We need to schedule a time …” It feels like you’ve been called to the principal’s office!
Many retailers dread that call, probably because this meeting is most often about taxes you owe. Sometimes, the meeting is also a review of expenses, and no one really likes talking about expenses. Either way, it’s not about sales or customers or inventory you can buy, so most retailers don’t like this meeting. I can’t say I blame you, but let me see if I can help.
Accountants have two very important roles in any business. First, they are there to monitor your expenses, and based upon similar businesses, they can suggest where your expenses are out of line. We most often see this happen in areas like insurance or workers’ compensation, for which changes in classifications make a huge difference in what you pay. The second role of accountants relates to taxes. A good accountant sets your business up properly so that you pay the least amount of taxes within the law. They should keep up on all those laws and advise you accordingly.
So, here are a few things you can do to make this meeting a little more pleasant and a little less scary:
Sales forecasting in retail is a distinct science. When done properly, the forecasts are by classification of merchandise, by month and by location. These forecasts should also include inventory levels so that you have just the right amount of inventory to meet demand without underbuying and missing sales or overbuying and losing cash. And yes, your accountant can be involved in cash-flow planning, but only after you’ve developed a solid sales forecast.
We have spent a lot of time studying forecasting and inventory planning, and doing those things right can be the difference between having or not having cash. It’s worth a deeper discussion.