Wednesday, December 5, 2018


Ask me about information on the tax savings HRA accounts available for SMB’s to reimburse employees for out of pocket medical fees.  These allowable medical costs are detailed in the IRS in Publication 502 for individuals. Do you track all your allowable medical costs?

Wednesday, November 28, 2018

Adversity Test for Retailers
The Adversity Test enables you to evaluate the strength of your retail business: how well might you withstand unexpected adversity? The information gained from this test can help you in at least two ways: you can identify your business’ weaknesses; you can prepare to gain your banker’s support, perhaps before you need it.
Step 1.  Calculate Your Business’ Ratios
The Adversity Test compiles ratings of the trends of five key financial ratios in your business and your retail segment. Bankers watch these five ratios closely, and so should you.

Here are the ratios you must calculate: Current Ratio; Debt-to-Worth Ratio; Inventory Turnover; Gross Margin Percent; Profit Before Taxes Percent.  (See column to the right for a refresher on these.)  Locate the financial statements for your store for the past three years, and calculate the five ratios for those years. (ROI Members can use The ROI's Key Ratios Calculator.)
Using a form like the one below, list your business' key ratios for the past three years.  It is the trends that are most telling!
Step 2. Score the Trends of Your Ratios
In the column marked “SCORE”, assign a score to each ratio, using this standard:

1 = substantially down
2 = slightly down (1 to 2 tenths)
3 = no change
4 = slightly up (1 to 2 tenths)
5 = substantially up
Step 3. Calculate Your Adversity Score
Then, using the five “Score” figures, calculate your final Adversity Score with this formula: 
Current Ratio score minus Debt-To-Worth Ratio score plus Inventory Turnover score plus Gross Margin Percentage score plus Profit Before Taxes score = Adversity Score 
Year 1
Year 2
Year 3

Current Ratio

Debt-to-Worth Ratio


Gross Margin %

Pre-Tax Profit %

Step 4. "Well...Is That Good?!?"
A score of 0 or below may indicate a precarious position and you can probably wave good-bye to that hoped-for loan! You may have just had record sales, but if these ratios are out of line your banker will not be pleased, nor should you be.
If you scored 1 - 15, you are not quite in a position of safety. You can, however, pinpoint your “losers” and make significant improvements toward strength.
If you scored 15 - 24, congratulations on doing a good job of juggling the many concerns of your business.  Continue looking for improvements and keep watching trends within your business and your industry.
This Is Just the Start
Of course, the Adversity Test scores are not to be considered by themselves. Many other factors go into evaluating a business!
ANALYZE Your Ratios
Look at your five ratios individually. Pinpoint the improvement or decline of each one. For instance, if turnover is slowing, that indicates a build-up of inventory levels. An increasing debt-to-worth ratio would suggest a growing reliance on debt.  It’s possible that cash is tied up in inventory, and the business needs to borrow money to finance its operations. More debt can mean higher interest costs, resulting in a lower profit before taxes.

COMPARE Your Ratios with Your Industry Averages
Industry “benchmark” figures for more than 50 retail segments are posted here on The ROI site.  (Use the drop down menu in the next column to find your segment.) With this data, you will be able to compare your business’ performance and financial condition to others in your industry. Note: The ROI provides these benchmarks only as a guide for teaching how to use these ratios. Your ratios will vary due to numerous factors including location, inventory, etc
When you place your ratios beside those from your industry, what differences do you notice?  Are you "stronger" or "weaker" than other retailers in your segment?
This perspective is very important.  (In fact, many retailers have the pleasant discovery that they are doing better than their peers!)  You can be certain that your banker will be aware of the industry trends.  You need to be able to explain why your ratios are different.
Look to the Future: "Turn On Your Financial Headlights!!"
The Adversity Test examines the past and the present.  But, what about the future?
History is of limited value unless we apply those lessons to the future. Use the information generated in the previous steps to determine your target ratios for the next one to three years. Incorporate industry standards, company policy, your personal comfort level – everything that helps you arrive at a positive, realistic goal.
Use the Adversity Test to quickly assess the past, present and future trends of your business. By revealing your business’ weaknesses (if any), this test can help you deal with unexpected difficulties ahead. Those difficulties may not drag you down with them, but remember—luck is a flimsy rope to rely on! With the insights gained from the Adversity Test, you will have a much better chance of holding on in the face of difficulties.

12 Customer Dos & Don'ts
Use these quick and easy rules to make sure your customers keep coming back for more.

It's easier to sell to existing customers than to acquire new ones, so it's good sense to keep the customers you've already got.
Here are some simple rules to ensure that customers continue to come back for more.
DO put connection before content. Clients don’t want you to sell to them; they want you to genuinely care about them. Take the time to build a personal connection before you start talking business.
DON'T badmouth the competition. Only people who are insecure try to build themselves up at the expense of others. Show your competitors the same respect you'd want if the positions were reversed.
DO focus on individuals, not companies. You may be selling to an organization, but you’re doing it through an individual. Remember: ABC Inc. is not going to buy your offering; but Joe might.
DON'T give a sales pitch. Pitches are a great way to shut people down and pigeonhole you as a hustler. Even when speaking to a group, make the interchange a conversation, not a lecture.
DO engage with customers as equals. The client conversation should contain a feeling of mutuality rather than talking down to or being subservient to your clients.
DON'T attempt an "end run." Bypassing a client or customer contact who is ambivalent or hostile will create an enemy for life. That person will constantly work against you ... from the inside. You don't want that.
DO keep the conversation mutual. Your goal is to earn your client’s trust by connecting with them, thereby creating a sense of safety. You can’t do that if you’re yakking away.
DON'T pull your punches. Never be afraid to tell clients what they need to know if you feel they might be making a mistake–especially if that mistake involves buying your product.
DO be willing to play “little league.” Even if you know there’s a huge (i.e. big league) opportunity, shove your own agenda aside and focus on whatever game this client wants to play right now.
DON'T play negotiation games. That stuff you read in the "How to Negotiate" books? Forget it. You're trying to forge a relationship, not win a zero-sum competition.
DO self-disclose when appropriate. Human beings buy from human beings. Rather than talking purely business, it's OK to occasionally bring up family, hobbies, or whatever will be of real interest to you and your clients.
DON'T mistake apathy for loyalty. The surest sign that a client is about to switch to another vendor is a lack of enthusiasm for you and your offering.
This above is loosely based on a conversation with Susan Scott, author of the best-sellers Fierce Conversations and Fierce Leadership. If you found this column helpful, click one of the "like" buttons or sign up for the free Sales Source "insider" newsletter.

Geoffrey James is an award-winning journalist who has written hundreds of articles on sales and marketing, and has helped thousands of sales professionals. James' latest book is How to Say It: Business to Business Selling. @Sales_Source