Tips for Music Professionals 40 and Under Series: Finance
Key financial strategies from "40 Tips for Music Professionals 40 and Under"—a NAMM U session presented at The NAMM Show 2013. The session was hosted by CJ Averwater (pictured), Cris Behrens and Ryan West of NAMM YP (Young Professionals).
Use this as a checklist, and share it with your employees.
1. Take accounting and business 101 courses online, at a college or from books. This will make a big difference in your personal life and business. Knowing what affects your bottom line is crucial when going to your boss or banker to pitch ideas.
2. Use Alan Friedman's inventory management equation: X = 360 x Gross Profit % (as a decimal). If you can sell a product within X days, buy it. Otherwise, don't.
3. Read Financial Intelligence: A Manager's Guide to Knowing What the Numbers Really Mean by Karen Berman, Joe Knight and John Case. This book has everything you need to know if you have a non-financial mind.
4. Watch your GMROI (gross margin return on investment). We all want that one metric to monitor our businesses. The truth is, there isn't one. However, a great tool to measure inventory efficiency is GMROI. It will tell you whether you have the right inventory mix or are charging enough for it. You can use GMROI by location, product category or even SKU.
5. Pay attention to KPIs (key performance indicators) and benchmarks. If you want to move it, measure it. There are a lot of ways to measure financial performance, inventory, email, websites and so on. The reality is we've all got a ton on our plates, so pick the numbers that you want to improve upon, and focus on them. Having a baseline of where you are starting or where you want to be will define your progress. Sharing groups are another way to measure your progress.
6. Focus your attention on activities that contribute to the bottom line. Time management is becoming a key to survival. It doesn't matter how good you are or how much time you spend on something. If it doesn't contribute to the success of your organization, cut it from your schedule.