Quality Financial Planning for Every Action Sports Retailer; No Accounting Degree Required

Rarely, but once in a while, I come across something I want to plug. Not too long ago, it was the new Board Retailers’ Association (


. If you haven’t joined yet, get moving.  Opps, there I go plugging them again.).

This time, it’s some inexpensive, easy to use, financial planning software that the Retail Owners’ Institute has developed. So today, instead of ranting and raving about some possible industry trend, or saying something depressing about how the skate industry might be evolving, I thought I’d say glowing things about this software in the hope that some of you might check it out.  
I doubt there’s an action sport retailer (or at least not a successful one) who hasn’t figured out that some form of good financial planning is a requirement for success. I’ve written from time to time about cash flow, budgeting, margin analysis, and financial statements. I’ve tried to present some simple ways to approach those issues, but at the end of the day the need to create and manage separate templates for all the planning tools, or trying to integrate them, can be a bit of a daunting task. This software solves that.
I became aware of the software, called Strata-G Financial Planner, when I went to a seminar on retailer financial planning at the Snow Industry Conference in early April. Yeah, I know it was the Snow Industry Conference, but let’s get real- most core retailers are not just skate, or snow, or surf and, fundamentally, they have a lot of the same business issues. So I decided to write this for Skate Biz because that was my next deadline and no other pressing topic was popping into my head. What? TransWorld has reorganized again? Only one biz mag now? Never mind.
Retailer Owners’ Institute Co-Founders Richard Outcalt and Patricia Johnson started going through their presentation on financial statements and how the balance sheet related to the income statement and stuff like that. This was not exactly the dynamic and inspiring part of the presentation, especially for a finance trained guy like me who, for better or worse, has had the accounting classes they were trying (with some success) to compress into 20 minutes instead of two years.
So my eyes glazed over a little. But when they got to the part of the presentation that focused on the financial planning software, I perked right up.
It Can’t Be This Easy
That has my immediate and overwhelming thought. Three lousy input screens covering historical data and some rough plan numbers for the next year that you can modify with a click of a button is all that’s required?   Then it spits out projected income statement, cash flow, and balance sheet by month with ratios included? And you can add the departments you could possibly want and it gives you open to buy for each one? 
Where the hell was this thing when I needed it? Every financial model I ever built took at best days to create, and there was always some fudge factor to get the balance sheet to balance. Uhh, actually, you see, it’s not that I really  fudged my balance sheets. I mean, it’s not like it really mattered. Give me a break- it was only a little, tiny, teeny weenie fudge. And I was the only one who would ever find it anyway- I made sure all my models were complicated enough to guarantee that.
Anyway, how ‘bout this Strata- G Financial Planner Software? Ain’t it great! Go to http://www.retailowner.com/ and check it out. You can even download a fully operational copy for evaluation purposes that works for five days, which means I have three days to finish this article.
There are a couple of reasons why the software is so easy to use. First, the structure of the financial statements is such that it really only works for retailers and, from my point of view, it’s particularly well suited to smaller retailers. What that means is there isn’t a bunch of extra stuff that adds complexity in the name of giving the software “flexibility,” which I have found is often a code word for making software too complicated to use.
Second, it’s financial planning, not accounting software. That means there aren’t endless line items for you to complete. It’s concerned with showing trends, not detailed nuts and bolts. Operating expenses, for example, are entered in only five line items; payroll, selling, occupancy, administrative, and depreciation expense. Want more detail? Want a different line item for each size of post it note you buy? Great! There are lots of people who will charge you a fortune to create that model. I personally will charge you as much as you want to pay, so call me.
In the end, when you have that gloriously complex model, you won’t be able to see the forest for the trees, which kind of prevents you from achieving the whole goal of financial planning. And, by the way, it will also leave you right down in the mud with me, fudging your balance sheet to get it to balance for no good reason other than that you love to screw with Excel.      
What could keep this software from working for you? To get the most use out of it the fastest, you need good historical numbers to enter as a starting point. I have to believe that most successful skate retailers (or snow or surf or candle retailers, for that matter) already know that and have those numbers. If you’re one of the shrinking number of retailers sitting there thinking either 1) “I’ve got those all in my head,” or 2) “My accountant gives me that stuff two months after the end of my fiscal year,” or the dreaded and ultimately fatal 3) ”I don’t need that- I run this business on my gut,” do not visit the Retailer Owners Institute’s web site and do not download this software and do not waste even the ridiculously cheap $139.00 this software costs, because you’ve got bigger problems to solve first.
Did I say $139.00? My mistake. At this presentation, I was sitting next to Board Retailer Association founder Roy Turner. His eyes lit up at approximately the same time as mine and, being as impressed as I was with the software, he’s made a deal with the Retail Owners Institute. Members of the Board Retailer’s Association can now purchase the software for $100.00.  For those hundred bucks, you not only get the planning software, but training software that teaches you all about open to buy and financial planning. It usually sells by itself for $119.00
Using the Financial Planning Software
If I were a retailer, there are two things I would use this software for. As a management tool, I’d use it probably weekly to make sure my plan reflected any real or projected changes in business conditions and to make sure I had a plan that made me a profit for the year. Margins looking better (or worse) than originally projected? Take thirty seconds to change it in the impacted department and see what the change for the year looks like. Higher or lower inventory levels looking likely? Put in the new inventory numbers and see how your open to buy changes.
The magic here (assuming you have those historical numbers) is that Strata-G takes almost no time to use and will get more and more valuable as you use it. Even entering the initial data will take very little time, though of course you can spend as much time as you like envisioning the future.
When you think that the future you’ve envisioned might change, you can project how those changes will impact your business and decide whether and how to react sooner rather than later. Changes made sooner rather than later have more of an impact over the year and are usually less painful to make in the first place.
The second thing I’d use Strata-G for is to make my banker, or other financing source, happy. Bankers are not interested in taking risks. They are not impressed by three inch thick financial plans because extracting the essential facts from them is time consuming. They have to present and defend their loan to you to others in the bank and the easier you make that, the more they like you. I make those observations as a former banker.
This software allows you to give your banker the information they need to understand your plan and financing requirements in a simple but complete format. You can do some simple “what-if-ing” with your banker so you are both on the same page in terms of possible risks. The only thing I might add to the information you can print out is a list of assumptions. It’s always nice to explain why you did things the way you did them. It gives bankers a warm feeling to know that you’ve considered the possible impact of things that could go wrong.
Go take a look at this software. It will save you time and help you make better business decisions faster.