“Finance is the language of communication,” says Steve LeFever, chairman of Business Resource Services and the presenter of a seminar entitled “Managing in an Uncertain Economy: The Jeweler’s Advanced Fiscal Physical.” “But,” he added, “the financial language is also an art and a science.”
LeFever demonstrated his knowledge of the financial language during the two-and-a-half-hour presentation. LeFever, a former credit analyst for a bank, gave attendees insight into the work of traditional credit analysts, including the hidden costs of having too much inventory. “The costs of too much inventory-including outdated merchandise-are `hidden’ because there’s no line item on a profit and loss statement for them,” LeFever said.
LeFever walked jewelers through profit and loss statements and balance sheets, working through several years of data drawn from the jewelry industry. “I’m here to show you how to take your business apart and put it back together to ensure that it’s fiscally fit,” he said. Jewelers should check fiscal fitness twice a year, he added.
LeFever charted the flow of money through a business to teach jewelers the “key drivers” of cash flow: gross margins and inventory turnover. But credit is also a driver of cash flow. And some drivers of margins include sales figures and discounts, if any, on merchandise. “Bankers won’t lend you money unless you’re fiscally fit,” the former banker reminded jewelers. “Know the tools you need to make that happen.”
* Actions to improve fiscal fitness include:
* Gathering accurate financial information;
* Packaging the information so you can see relationships;
* Calculating financial ratios;
* Recording your industry composites (if available);
* Comparing your results;
* Analyzing the possible causes of problems;
* Taking action-formulate a plan, implement it, and monitor the results.
Follow JCK on Instagram: @jckmagazineFollow JCK on Twitter: @jckmagazine
Follow JCK on Facebook: @jckmagazine
