The Tracking Tool that Changed the Way I Do Consignment

the tracking tool that changed the way I do consignment

Before I share with you the tracking tool that changed the way I do consignment, let me tell you a short story.

I am committed to resale. My entire family is committed to resale. I depend on it as the primary source of income for my family. I also depend on it to keep our family budget manageable so that I have the ability to do what I love to do for work. So, we shop thrift stores, consignment stores and yard sales. We wouldn’t have it any other way.

We were on vacation a couple years ago and found ourselves shopping at a Unclaimed Baggage store in North Alabama. One of the first places I go when I am in a resale venue is to the book department. I admit it, OK, I have a problem with books. I can’t pass loaded shelves full of used books without stopping to dig for buried treasure.

My eyes landed on a purple business book by an author I hadn’t heard of before titled “CEO Tools: The Nuts-n-Bolts of Business for Every Manager’s Success.” I looked at the price tag and it was $1.99, but being an experienced resale shopper, I was aware of the 1/2 off book sale that day.  Even if it was a bust, I would only lose a buck. Turns out hat was the best dollar I have ever spent to invest in my business leadership skills.

Kraig Kramer, the author of “CEO tools,” was at the head of eight different companies over the course of his career in various industries and among different sized companies. What struck me the most about this treasure trove of CEO tools was the practicality of all of them for leaders of businesses of any size. Most of these tools are not original to Kraig and are used by lots of CEOs, but he put them in a context that made sense to me. I have integrated several of those tools in my monthly financial analysis of New Leaf Consignment Galleries.

These tools are most effective when used together as a suite of metrics. But for the purposes of this article, I am going to tell you about my two favorites. The most effective and versatile of these tools are the Trailing 12 Month Chart (t12m) and the Trailing 52 Week Chart (t52w).

The Trailing 12 Month Chart

 

The t12m is a simple metric that can tell you loads of information about your business and also predict future trends or turns that need to be addressed before they become a problem for your consignment business. This is the tracking tool that changed the way I do consignment. The t12m is a simple line chart comparing the metric of your choice based on the previous 12 months. For example, If I add together my gross sales for November of the previous year through October of the current year I come up with the total gross sales for the previous 12 month period. At the end of November of the current year I can find the comparative number by totaling gross sales since December of the previous year. These two numbers can be compared to one another to see if my total sales for a 12 month period are increasing or decreasing. When I compare these numbers over time, I can see trends in sales growth or contraction. If I see two or three months in a row that trend down, I know I have a problem that needs to be addressed. This graph becomes an indicator of potential hazards to navigate or strengths to build upon.

The t12m will work for a limitless number of metrics. You can see trends in gross sales, gross profit, net profit, profit margins, sales of a certain category of merchandise or just about any other number you need to track. Once you have a history of at least twelve months you can begin to see long term trends that will help you make the adjustments you need to make in your consignment business to thrive.

When I decided to integrate this chart into my monthly financial analysis, it only took me about an hour to compile these numbers using our Consignment Software (Simple Consign by Traxia) and a simple Excel spreadsheet. You can build your own graph by using excel formulas and the charting tools or your can find a template online. If you need help finding this tool email me and I will be happy to help you find a template that works for you.

Some of the problems and opportunities that I have been able to engage since I began to use the t12m have been staffing issues, competitor impact, partnership effectiveness, total floor space adjustments and many more. Below is a t12m chart for my business with the actual numbers removed so you can see how I use it to analyze big shifts in my consignment business.

the tracking tool that changed the way I do consignment

The Trailing 52 Week Chart

 

The power of the t12m is that it gives you a big picture view of what is happening. The disadvantage is that it requires a lot of time to develop trends with only one datapoint per month. A much faster and more responsive view of your consignment business can be accessed with the t52w. This overview of your business takes more legwork to put together. It took me about 3 hours to compile my weekly sales over the course of 2 years.

In order to get a year of trending, you need to compile two years of data. If you are just starting your business or are less than 2 years old, start to compile the data points now and you’ll be able to see your trends develop in real time (I wish I would have known this six years ago).

After your data is compiled and charted you will be provided with with fast feedback (one data point per week) so you can make critical decisions before your problems get out of hand. It’s like the t12m is your overview flying at 35,000 feet and the t52w drops you down to a 10,000 feet. You often see more details and shorter term problems that can be alleviated more quickly. Another way to look at these two tools is that the t12m provides you with leadership data (long term success) and the t52w provides you with management data (short term success).

The t52w is created in exactly the same way as the t12m except it includes the data from the previous 52 weeks totaled into one number that can be compared on a week to week basis. This tool is useful to see things like the impact of new hires, the effectiveness of new advertising or signage, the productivity of tools you integrate into your business, and just about any other information you need to access. After I spent the 3 hours compiling my initial data, I simply add my weekly sales number to the chart on Monday morning from the previous week.  It’s that simple to maintain.

 the tracking tool that changed the way I do consignment

The Inherent Danger of the t12m and t52w

 

As with all analysis tools, there are challenges you want to be aware of in implementing and using them.

My business partner, who is much more experienced than I, occasionally reminds me that only measuring your gross receipts in business is like a basketball team only tracking how many points they score. That team can score huge and still lose every game if they have a killer offense, but no defense. For the consignment shop, that looks like huge sales with no profit at the end of the month. So, be careful to always look at multiple dimension of your business and not rely upon a single metric.

Get a Business Makeover

 

The goal of Resale Makeover is to sophisticate and systematize the resale industry so that we, as resale owners and operators, can thrive and take the resale industry to the top. We believe in what we do and we know how valuable our industry is to the communities in which we live. Sound business analytics and principles are the tools to help us succeed and share our message with a country that needs to be introduced to the power of resale.

If you run a consignment business and want to see your shop(s) thrive, join the Resale Makeover community by filling out the form below.

Then join in on the conversation…

What is your favorite tool for assessing the health of your business?

Are you inspired to use these tools or find others that will help your consignment business thrive?

Comment below and let’s talk about how we can sophisticate, systematize and thrive!