Pride Biz Transcript

Pride Biz Transcript

The Little Guys

[00:00:00]

[00:50]

Narrator: Located just south of Chicago, The Little Guys Home Electronics specializes in selling and installing home theatre equipment. In the days of superstores, independent retailers such as The Little Guys are increasingly rare, yet The Little Guys not only survives, but thrives, despite the presence of a Best Buy less than a mile away. Buying wisely, and keeping an eye on the bottom line are two of the keys to the success of The Little Guys. Evie Wexler handles most of the day-to-day accounting for the store. Like many small business owners, she uses a commercially available software package.

Evie Wexler: We use Quickbooks. Actually, when we opened the store, and Paul was part of it, he already had a store, and he was using Quickbooks. You use it to pay your bills so it keep track of what vendor, how much business you’ve done with a vendor, you can use it for payroll, it figures out the withholding, social security, medicare, any other thing, and keeps a running total of what everyone’s earning.

Narrator: The company uses an outside accountant to monitor their long-term health.

EW: Our accountant plays a pretty important role, especially in the early days because he taught us a lot about the financial end of the business. We see him at least once a quarter he does a lot of the adjustments for us as far as depreciation, we leave that kind of stuff to him, and he goes over our financials with us each time he comes out and makes these adjustments.

[02:11]

Narrator: Overhead is a major expense in any retail business.

Paul Gerrity: There’s a lot of things you have to take in consideration with your overhead, when you’re considering costs and overhead. You have to look at, there’s trucks you have to buy to deliver the merchandising and get it out to them, there’s gas we have to put in the trucks, plus the car insurance on the trucks. The people that are installing, if it’s a two man crew, we’re paying those two men to drive to the site. When you get into the store, you have the cost of insurance for the store, cost of the heat, the electricity, we have warehousing, so it’s another building we have to provide to keep all the goods.

Narrator: Tracking operating expenses are an important element of the accounting process.

EW: Well, you do have to look at the sales report to see: are you up or down for the month, compared to last month, compared to last year? Is there a reason? If you are down, is there a reason that you’re down, is there something you’re doing wrong, is there some change you need to make?

[03:05]

David Wexler: In the beginning, I took each day’s invoices, looked at them from the day before, looked at them from the day before, the two days before, the week before, as the business gets a little bit bigger, and gets a little more successful, you need to know the numbers, you need to pay attention. But, don’t kill yourself, so you can’t overanalyze the numbers, you need to be aware of them, you need to know what’s going on, especially as the business is more service-oriented, and more labor-oriented. As the custom part of our business expands, deals get finished, and big deals get rung.

Narrator: Cash flow is the lifeblood of a small business. Financial reports help monitor how much is coming in, and how much is going out.

EW: So when you look at your financials, it really comes home when the IRS comes calling, when it’s tax time, because you’ve earned money. You have to send in X dollars because you have this much profit. You look around and say, “but where’s the money? There’s no money!” Well, you’ve got to look to your inventory.

[03:58]

Narrator: Because The Little Guys sells high-end merchandise as well as full home theatre systems. Their customers often negotiate a price. This affects cash flow.

EW: People when coming into an electronics store feel like they’re coming to buy a car, I guess. They have to negotiate the price, there’s always some give back. You have to have a clear idea in your mind what you can give away, which isn’t much, but what you can give away, and at what point you need to say no. It’s hard if twenty thousand dollars is coming in for you to say no, especially if you have bills to pay. If you bring in twenty thousand dollars and you’ve put out eighteen thousand dollars for the equipment, now you’ve got to pay your rent, your electric, for your trucks, your employees, you’ve got to pay all of that stuff out of that two thousand dollars and it may not be enough.

Narrator: The business installs home theatre systems for both individuals and companies. Waiting for payments can be frustrating.

[04:54]

DW: There’s long-term construction projects, and that kind of thing, and there’s balances due at the end, and sometimes people aren’t as quick to pay the balances due. Even though the job’s complete, and everybody’s happy, they’ll take an extra week,or two weeks, or three weeks, and that’s all because, from my perspective, it’s all because we didn’t take it seriously enough in the beginning to lay out a hardcore enough plan in the beginning about exactly when the monies are due. You need to collect the money up front, you need to get as much money as possible up front, you need to make sure that you get complete payment on the jobs, and be careful, be careful who you do business with.

Narrator: The company limits the number of brands they sell, and keeps their inventory low, this keeps their expenses under control.

EW: We realized that this year we’ve been accumulating things in the warehouse. We need to sell off those things in order to create the cash flow to buy new things that are more saleable that people will buy quicker and turn it over more quickly so that we’ll make more money.

[05:56]

Narrator: Each of the partners is responsible for buying certain products, they communicate about purchasing to avoid duplicating items. Over the years The Little Guys has built strong relationships with manufacturers. This allows them to buy products at reduced rates.

There may be no factory offer. There may be no promotional offer. But you go to the manufacturer and you say, “look, instead of placing an order for two thousand dollars, I’m going to place an order for six thousand dollars, but I need an extra thirty days to pay for it, and I want an extra three percent off.” After awhile they’ll come to you with deals. Once they see you pay your bills on time, and you’ve established yourself, and they know you can live up to your promises, they’ll come to you with the deals a lot of the times, but always ask.

Narrator: Careful accounting and years of experience helps The Little Guys compete with such big guys as Best Buy and Circuit City.

[END]