Welcome to the Financial Management for Music Stores course. Join Alan Friedman, Friedman, Kannenberg & Co. PC, as he covers the essential financial tools and ways to manage your retail store's finances and increase your financial ease of doing business.
Once you've completed the course, you can take a brief online test (that includes videos and training materials) to receive a Certificate of Training.
Directions to take the Financial Management for Music Stores certification test:
Welcome to NAMM’s Financial Management web resource. This site is intended to provide you with an online educational resource for “best practices” in the fiscal management of a retail music store.
A variety of key financial topics will be addressed, with more to be added over time. These topics will be categorized under the following major financial areas of store operations:
Alan Friedman talks about today's competitive marketplace, and why it’s imperative for music store owners to be able to generate, understand and act upon key financial reports, often on a daily basis. While generating sales and other revenues is “mission one” for most retailers, proper fiscal management is a close second in terms of the most important activities for any music store.
Why is inventory management important? Like all other business owners, executives and managers, music retailers have the inherent responsibility of carefully managing operating revenues, expenses and cash expenditures in an effort to preserve and maintain cash flow. But music retailers have the additional responsibility of managing inventory levels—the largest ongoing cash expenditure of any typical retailing business.
How much inventory should I be buying for a store the size of mine? Buying inventory is easy—buying the right amount of inventory at the right time is a bigger challenge.
In simple terms, "inventory turns" refers to the number of times you sell your entire inventory, in dollars, over a 12-month period. Your inventory turnover is calculated by dividing your cost of goods sold by the amount of average dollars invested in inventory over the same 12-month period. This inventory management indicator is becoming an even bigger issue in music retailing because of the immediacy of product offered to online shoppers. Trying to stock all things for everyone is not only nearly impossible, it causes inventory turns to decrease which, in turn, hinders the vital cash flow
How much inventory should I be carrying at any point in time? Managing inventory levels is arguably the most difficult challenge for any retailer, music retailer or otherwise. The challenge stems from many unpredictable factors, including having to guess what your customers will ultimately buy, unexpected downturns in the economy, real estate and the stock market, changes in technology, erratic manufacturing and product availability, high purchase requirements by suppliers with coveted product lines, and a general lack of prudent inventory management knowledge by many retailers.
What is Gross Profit and how much should I be earning? Gross profit is a financial term referring to the direct result of sales performance and impacted by a few different variables. While the sales price you earn and related cost you pay for a particular product chiefly determine the gross profit you achieve, there are other related variables that determine the gross profit you are earning.
Are you a music store owner with a lot of inventory and a lot of cash flow problems? Do you often wonder where your money is going each month, and why you still can’t take a decent owner’s salary? If the answer to these questions is “yes,” you probably don’t know what your GMROI is. This great analytical tool is for you! Regardless of if you have to calculate it by hand (even though your Point-of-Sale software will probably do this for you), tracking GMROI can revolutionize the cash flow of your business.
How should I be reporting all of my store's revenues? “I laid off my repair technician three months ago because money was tight. We’ve been scrambling to catch up with the repairs and now my road rep told me we’ve lost four accounts because our repairs have gotten so bad. What should I do?”
How much should I be spending on sales salaries? Sales salaries are one of the most debated areas of the retail landscape because different types of music dealers (full-line, combo/MI, school music, keyboard and print only) in different parts of the country find it difficult to determine appropriate compensation for sales staff. It’s not unusual to find salespeople feeling underpaid while the business owner (and many times the accountant) suggests that sales staff are either fairly, or typically, over-compensated.
How much should I be spending on rent? Everyone knows the old saying about rent and retailing: “It’s all about location, location and location.” As relevant as this statement is today, the Internet has greatly impacted rent expense and has made its measurement somewhat convoluted. Your customers can now research virtually any product they want via the Internet, which leads directly to the key question: “How can I convince potential customers to come to my store to buy this product from me?”
How much should I be spending on advertising? Advertising is an important expenditure for any retailer. Yet the field is always changing, which requires you to explore and consider new avenues of delivering your message to keep the image associated with your store fresh and to attract the best customers to your store. The good news is that with changing advertising media, some of these new ways to advertise actually require less manual labor and are extremely cost-effective.
Watch this video for an easy lesson on creating a budget and steering your music store toward profitability and success.
What's the best way to establish a budget for my store? The word “budget” is not at the forefront of most people’s minds, either professionally or personally. However, have you considered how the space shuttle makes its way though orbit each time it lifts off? No doubt, the project started with a plan (and a budget) for all the time and resources needed for a successful mission.
How do I convince my bank to lend to me? There’s an old saying, “The time to get a banker is when you don’t need one.” That’s because most people wait until there’s a severe cash flow crisis before they contact a banker to obtain a much-needed loan. Unfortunately, a retailer's chances of getting a loan are greatly diminished if the store is unprofitable and losing money. But even the most profitable music stores can put themselves out of business if they don’t have the financing needed to acquire inventory, buy computers to improve office efficiencies, or make leasehold improvements to at
What are the warning signs that internal fraud or theft might be occurring at my store? Every year, statistics are compiled about internal fraud and theft that happens in U.S. retail stores—and those statistics are startling: