What is a "Star Performer"? A "Star Performer" is a STORE that significantly surpasses the generally recognized median performance measurements within the industry. A "Star Performer" is also an OWNER or MANAGER of a business who has higher than average expectations and demands not only for the business but for the invested capital.

We consistently find that the "Star Performers" we come in contact with have certain similarities: they manage to do the right things most of the time and they accept profit as a worthwhile goal.

To find out how you and your store rate, take the following quiz. Each question has two possible answers. Circle the answer that more closely fits your store's current situation.

FINANCIAL SYSTEMS AND CONTROLS

1. Financial Statements

a. Prepared once a year or quarterly. Or, if prepared monthly, chronically late, many times several months late.

b. Prepared monthly, using the standard industry format. Ready for management review by the 10th of the following month.

2. Expense Budgeting

a. No expense budgeting done.

b. Formal budget prepared for year, by month. This budget is compared to actual figures each month and corrective measures taken immediately when expenses get out of hand.

3. Payroll

a. Reported on Financial Statement as a single total.

b. Reported on Financial Statement by function (i.e. Selling, Office, Management, etc.).

4. Payroll Budgeting and Scheduling

a. Everyone comes to work when the store opens and leaves when it closes. Payroll expense hopefully is not too high.

b. Payroll expense for each responsibility area is budgeted monthly a year in advance and weekly at least three months in advance; each month the actual vs. budgeted is analyzed; weekly schedules are posted well in advance; split shifts are used when needed.

5. Shrinkage Control

a. Take a physical inventory once a year and make little or no effort to reconcile to perpetual inventory records.

b. Take cyclical inventories and thoroughly investigate discrepancies to detect instances of faulty record keeping, external or internal theft.

6. Management Information System

a. Either do not have one, or have only a very rudimentary one that gives a minimum amount of information, or have one that is not used.

b. Have a Management Information System based on the Retail Inventory Method that gives very detailed monthly information for each merchandise classification (Sales, Inventory, Order Status, IMU%, MD%, Shrink, GP%, STR) and each salesperson (sales per hour, average transaction, number of items per transaction) and is used regularly to monitor vital signs of the business.

SALES AND MERCHANDISE INVENTORY PERFORMANCE

7. Market

a. Spend 45-60 days per year at market, without advance preparation, taking with you the top 2-3 salespeople.

b. Carefully plan your market trips. Get buying office/buying group help. If salespeople go with you, let them meet you at market for just 1-2 days and never let top 2 go to market at the same time.

8. Buying

a. Go to market and buy based upon quantities bought last year.

b. Use Open-To-Buy by merchandise classification to plan merchandise purchases.

9. Merchandise Classifications

a. Have a minimum number of classifications to avoid record keeping and employee confusion.

b. Class structure is well defined to allow for better merchandising decisions.

10. Markdowns

a. When merchandise is sold below the original price, simply record the sale at the actual selling price permitting markdowns and shrinkage to become co-mingled in the computation of gross margin.

b. Include planned markdowns in the Open-To-Buy process, carefully record them when recognized and compare actual vs. planned at the end of every season taking corrective action where needed.

11. Purchase Order Management

a. Purchase orders written on vendor's form. Copies are not provided to receiving department on timely basis, perpetual outstanding order position is not maintained by classification.

b. Purchase orders written on your store's own Purchase Order form and a copy or facsimile is given to the receiving department so they can use it to check in merchandise. Perpetual on-order status is maintained by classification. Purchase orders are deducted immediately from the Open-To-Buy.

12. Receiving & Marking

a. Treat the receiving and marking function as a necessary evil, permitting everyone to help out in the receiving, tagging, etc.

b. Assign the receiving and marking function to one person as their primary responsibility and have written procedures for handling receipts, returns and transfers.

13. Achieve Sales Increases

a. Compare this year's sales to last year's sales and are satisfied with any increase.

b. Develop monthly sales plans for each store, classification, and salesperson and thoroughly develop and execute a plan to achieve sales increases that consistently exceed the inflation rate.

PEOPLE MANAGEMENT AND SALES DEVELOPMENT

14. Sales Training

a. It is up to the salespeople to educate themselves.

b. Regularly scheduled (weekly) selling staff meetings to review new merchandise and provide sales training.

15. Marketing

a. Direct all advertising expenditures to newspaper, radio and other printed media, usually with little thought or planning.

b. Maintain a high level of direct marketing activities with your customers and target market by use of direct mail advertising and telephone contact.

16. Personnel Management

a. Tell each employee when he is doing something wrong.

b. During the hiring interview the job description was thoroughly reviewed. Each employee is given a written job description when hired defining the requirements of their job and what is expected of them. All employees are given a formal performance review at least semiannually in the first two years of employment and yearly thereafter.

17. Organization Structure/Management

a. Informal organization with family members and other managers doing what they want and stepping on each others' toes.

b. Well-defined organizational structure with a written job description for everyone, including family members and management.

18. Policies and Procedures

a. No written policies or procedures or have an outdated and un-used version. Whenever a problem arises; you make a decision and handle it based upon early individual situations.

b. Carefully thought out and written policies and procedures that include built-in internal controls are provided to all employees and used as reference materials.

Now, give yourself 1 point for each "a" answer and 4 points for each "b" answer and see how you rate.

61-72 points: You are making money and having fun.
37-60 points: You are surviving, but need to make improvements.
18-36 points: You are sinking, and you know it. You should get out of the business.

If you did not score at least 61 points, there is room for improvement. Go back and review all the questions for which you gave an "a" answer as these are the areas you should consider working on. You may find that some of these areas will be relatively easy for you to correct; for others you may need outside assistance. The important thing to remember is that these improvements can have a positive impact on your store's success.

This article was written by Linda Carter, President of The Retail Management Advisors, a retail consulting firm whose mission is to help independent retailers survive and thrive. Linda can be reached at 1-877-206-1299 or l.carter@the-retail-advisor.com. Our web site is http://www.the-retail-advisor.com

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