Each day this week I am sharing a newsagency management benchmark which I hope you find useful. The benchmarks are not rigid, use them as a guide to determine what is right for your business. I have developed these benchmarks over years of working with a variety of newsagencies in many different situations.

Management benchmark #4: stock turns

Stock turn is a measure of the numbers of times you turn the value of your average stock holding in a product category in a year. For example, if your average holding is $10,000 and your sales are $100,000 with the cost of those good being $50,000, the stock turn would be 5.

The formula is cost of goods sold for the category for the year divided by average stock holding value.

A common mistake is dividing retail sales value by average stock holding value. This would give you an inaccurate figure.

Here are benchmarks by key categories I suggest newsagents aspire to achieve:

1. Stationery: 7.0.
2. Cards: 3.5.
3. Gifts: 7.0.
4. Toys: 6.0.
5. Plush 7.0.

In your newsagency software you ought to be able to report on stock turn for a set period or on a moving annual total basis. Seek this out and run the report to see your figure for yourselves.

If your turn is low you can correct this by increasing sales without increasing stock or reducing stock without reducing sales. either approach takes planning and commitment.

Key to achieving a healthy stock turn is for your to control your inventory investment.

The Queensland Government has an excellent page on stock turn. I encourage you to check it out.

I hope this series helps newsagents look at their businesses differently and to ask questions about their performance in the context of best practice in our channel. Newsagencies with the brightest future are those where data is respected and benchmarks are set to be achieved and passed.

Each day this week I am sharing a newsagency management benchmark which I hope you find useful. The benchmarks are not rigid, use them as a guide. I have developed them over years of working with a variety of newsagencies in many different situations.

Management benchmark #1: revenue to staff ratio.

First up, by revenue I mean the total value of general sales (cards, gifts, magazines stationery etc) plus your agency (such as lottery) commissions.

Based on an average gross profit performance in the based of 28% to 35%, the revenue per labour hour benchmark I suggest is $250.00.

If your gross profit is between 35% and 40% (which it should be), the revenue per labour hour benchmark is $225.00.

You could argue that rent should play a factor in the revenue per labour hour target. I could understand that. However, my goal here is to provide a blended national figure you could compare against, to enable you to look at your business against such a benchmark.

I know of businesses hitting the two figures I have quoted as well as businesses falling below. No matter where you sit, the revenue to staff benchmark ratio can be useful in rostering and managing staff as well as guiding shop floor decisions you make.

If you have a data point on which you need to improve, understanding that data point and the levers which impact it can be a tremendous help.

I certainly find using this benchmark to assess efficiency.

Note: the benchmark figures are a guide only. In reality, the revenue figure per staff hour should be higher. Also, for hours worked – include yours too.

I hope this series helps newsagents look at their businesses differently and to ask questions about their performance in the context of best practice in our channel. Newsagencies with the brightest future are those where data is respected and benchmarks are set to be achieved and passed.

What is the worst that can happen to your newsagency business? A downturn in local industry, mass departure of residents, another newsagency or competitive business opening nearby, a collapse in consumer confidence?

These are other economic challenges could be around the corner yet too often small business newsagents are not prepared, they do not have a plan for dealing with the challenges.

I urge newsagents to take a moment and consider the worst economic activity which could hurt the business. Think about that and work back from the imaginary catastrophe on what you need to be prepared to do in order to get through it.

You can plan for an economic storm, I am sure of that. The best time for such planning is in advance of any such catastrophe hitting your business, well in advance in fact.

Those in hospital emergency departments, military, law enforcement and other public service areas plan and train for catastrophes all the time. It is essential to them being able to do their job in such circumstances. We in small business can benefit from the same planning and training.