NAMM U - 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 managemen

If you own a music retail business, you may well follow a do-it-now philosophy—which is, of course, necessary to keep things running. Still, you also need to think about tomorrow, which means taking action on your retirement and business succession plans. Fortunately, you’ve got some attractive options. For example, you could choose a retirement plan that offers at least two key advantages: potential tax-deferred earnings and a wide array of investment options. Plus, some retirement plans let you make tax-deductible contributions. Retirement Planning In selecting a retirement plan

To attract customers, your store should be filled with cool products that customers want and need. But finding out what customers want can be daunting. Over the years, I've learned to ask myself three questions before committing to a purchase order: 1. Can I sell it in my market? A crystal-encrusted upright bass may sell well in Hollywood but could sit on the shelves in rural Kansas. Knowing your customer base will help you fine-tune what will sell in your store. Also, be aware that your customers change with time. I hardly sell any small percussion upgrade items, such as hi-hat c

In my opinion, the No. 1 problem most music retailers face is inventory. They have too many things that aren’t moving and not enough of the things that are. This can be fixed by avoiding a few key pitfalls and identifying the winners and losers in your store. Before I go any further, let me say that if you are serious about being in the music business, you’ve got to have a quality point of sale system. You can do everything I’m going to share without a POS, but the amount of time you’d spend compiling data would easily pay for a POS. Let's look at a few stats to determine our inve

Do you know what departments or product categories are profitable at your store and, more importantly, what are not? Having a hunch doesn’t count. You need profit and loss statements at the department- or product-category level. Only when you know where your profits lie can you make the best decisions that maximize profitability. In addition, departmental profitability can be an important item on a manager’s report card, whether for the purpose of designing an incentive plan or for measuring his or her effectiveness. Departmental profit and loss statements give you an objective wa

It’s hard not to notice the daily fluctuations in gas prices. A recent news report estimated that the average American household spends about 4 percent of its annual income on gasoline. Plus, most freight shipments that get delivered to our doors arrive in vehicles running on diesel, which is even more expensive. For this reason and many more, we have to keep a close eye on our daily freight costs. Have you looked at your total invoice cost, then looked at the total freight cost related to that invoice? Is the percentage 5, 10, 15, 20, 30 or 50? It’s important that you know the an

As a music store owner, you can’t escape budgeting. At The NAMM Show, Lori Supinie of Senseney Music urged retailers to view their companies’ budgets in a new light—as a plan for profits. “It doesn’t matter if you’re not a numbers person,” said Supinie, a former CPA. “Planning is the key to being successful.” During this session, Supinie walked the audience through the essentials of the budgeting process. She explained why you need a budget, how to prepare a budget and how you can use your budget throughout the year. What is a budget? There are all kinds of budgets, such as purcha

During this NAMM U session, Alan Friedman of Friedman, Kannenberg and Co. revealed the keys to successful inventory management. According to Friedman, inventory management begins with knowing what products to buy and how many to buy. He armed retailers with a simple and easy formula to do this. “Every music retailer has too much inventory,” he said. According to Friedman, retailers only need to ask themselves four questions when buying product. He encouraged them to make these questions a permanent part of their buying process. 1. Can I sell this product?If it’s something your cus