Upside Down

1. Upside Down Business Breakthrough Karnan Associates, LLC A small business for small business Parker Karnan parker@karnanassociates.com 206.601.7019 www.karnanassociates.com

2. Upside Down What is your Your #1 responsibility In Business?

3. Upside Down Are you leaning into The Dip?

4. Upside Down What is your “kiss on the forehead” test?

5. Upside Down How do you slow down your life&Speed up your business SIMULTANEOUSLY?

6. Upside Down Are you managing people or circumstances?

7. Upside Down What really is the difference between leading and a managing?

8. Upside Down What is your current Rally Cry?

9. Upside Down A small business is the direct offspring of its owner.

10. Upside Down Knowing that you don’t know something can be a problem...

11. Upside Down Not knowing that you don’t know something can be fatal.

12. Upside Down Life is merciful, but unfair Business is unmerciful, but fair • -Bo Burlingham Author of Small Giants

13. Upside Down Good managers do things right. Good leaders do the right thing. -Warren Bennis Professor on Leadership Univeristy Southern California

14. Upside Down The best course for any leader is to be feared (respected) and loved at the same time.

15. Upside Down But if it is impossible to be both, then he should choose fear (respect) over love. -Machiavelli

16. Upside Down Failure of a leader to enforce the rules out of a desire to incur the affection of his followers…

17. Upside Down …can bring that leader to ruin in a hurry. • -Steven B. Sample Author of The Contrarian’s Guide to Leadership

18. Upside Down Never make a decision yourself that can reasonably be delegated to an employee • -Steven B. Sample President of USC

19. Upside Down Never make a decision today that can reasonably be put off to tomorrow. • -Steven B. Sample President of USC

20. Upside Down If you leave a white post alone, it will soon become a black post…

21. Upside Down Briefly, if you want the old white post, you must have a new white post. • -G.K. Chesterson

22. Upside Down Stewardship rates barely an honorable mention in the lexicon of current business terminology.

23. Upside Down A scan of cover stories business periodicals revealed that ‘strategy’ was explored a total of 57 times. Stewardship was completely ignored. • -Life@Work Journal 1998

24. Upside Down Energy is more efficient than efficiency. • -Franklin D. Roosevelt

25. Upside Down Anything worth doing at all… is worth doing poorly. • -Richard P Karnan Successful Father and Businessman

26. Upside Down When a new book appears, one should read an old one. • -Winston Churchill

27. Upside Down Effective leaders don’t run their businesses. If they did, they would be called runners.

28. Upside Down Leaders lead individual followers, who collectively give motion and substance to the organization of which the leader is the head. • -Steven B. Sample Author of The Contrarian’s Guide to Leadership

29. Upside Down Business Breakthrough Karnan Associates, LLC A small business for small business Parker Karnan parker@karnanassociates.com 206.601.7019 www.karnanassociates.com

30. Upside Down The entrepreneur’s dilemma: Is my business viable? Managing problems and opportunities Focused on Strategy and Tactics

31. Upside Down Session #1: 1:30-2:40 What to Manage and How to Measure it Session #2: 2:50-3:40 The ‘Kiss on the Forehead’ test Session #3: 3:50-5:00 How to Lead and build a Team of followers When to hold on; When to let go • Accessible v. Available • Upward mobility v. Downward mobility • Giving up the keys

32. Revenue per Foot 2009 Sales Plan $1,000,000 Sq. Ft. 2,000 $500 per foot Quantitative Upside Down

33. Upside Down Session #1: Know what to Manage It all starts with the Sales Plan Retail is a highly reactive business. As a result you must be highly proactive

34. Upside Down Session #1: Know what to Measure Gross Margin Inventory Turnover Average Inventory on Hand Months of Supply (forward cover) 70% of your expenses go towards Inventory and Payroll

35. Upside Down Think Real Estate not Product • QUICK TIPS • Footwear capacity: 1500 shoes • Avg. Retail: $100 X 1500 units = $150,000 • Annual Footwear Sales: $600,000 • Turns necessary to justify investment: 4 • Annual Sales per Style: 48 pair

36. Upside Down Tracking Average Inventory

37. Upside Down Step 1: Know your Capacity QUICK TIPS Compare current inventory with ideal capacity

38. Upside Down Step 2: Transfer Unit Capacity to $$ Capacity • QUICK TIPS • Remember 3 months of Forward Cover • The Rule of 4 • Justify Investment of niche categories like Trail, Spikes, and Walking

39. Specialty Soccer Profitability Our Goal: To quickly find the highest price at which a product will sell that will achieve our turn expectation.

40. Upside Down Why won’t it sell? • Something is wrong with the product. • Something is wrong with the price. • Something is wrong with the timing. • 4. Something is wrong with the visual presentation. How to know • Get it in the Rotation • First markdown of 20%-25% • Hard markdown of 40%-50%

41. Upside Down Step 3: Create Markdown Strategy • Enter sales discount • Enter markdown % over time • Enter estimated sell thru % based on prior history and trends

42. Upside Down The best buyer combines a great eye for product with a disciplined flow and markdown strategy • QUICK TIPS • Blend of art and science • A well told bad story is better than a poorly told good story

43. Upside Down Session #2: The ‘Kiss on the Forehead’ test Gross Margin Return on Investment (GMROI) Gross Margin Return on Employees (GMROE) 70% of your expenses go towards Inventory and Payroll

44. Return on Inventory Investment Annual GM$ 450,000 Average Inventory @ Cost $150,000 $3.00 ROI Upside Down • Cost Analysis • $2.00 is break even • $3.00 is profitability

45. Return on Employee Investment Annual GM$ 450,000 Annual Payroll* $150,000 $3 per Employee Upside Down *Does not include owner comp, taxes, or benefits Cost Analysis You owe your employees a healthy business What instills company loyalty?

46. Upside Down • Avoid the popular trap: Establishing Expectations • Avoid the spectacular trap: Building a Team • Avoid the power trap: Encouraging Authenticity

47. Upside Down The Non-negotiables 100% compliance

48. Upside Down Creating value in Specialty Experience Sales Associates: It must be measured to work

49. Upside Down Expanding your contribution and value Assistant Manager: Moving towards “Buy in”

50. Upside Down Bringing your talent & passion to the organization Manager: Moving towards Stewardship