A Few Words About Who we are
We have been in the industry for decades. We have watched so many changes take place and have tried to adapt to each new standard quickly.
Our latest trend line came about when the owner of a small chain came to us with a problem. They had a lack of PROFIT from his Revenue based on insurance payouts. So much of our industry promotes Revenue! This is especially true from the Big players but, there is very little discussion on PROFIT, Return on Investment (ROI) or margins.
This has become our driving force behind our business. 1. Start a conversation about achieving higher Profits
2. Supplying you with the tools and goods to accomplish this.
Choose Business based on sound principles
We are based on the principles of increasing your profits:Revenue less costs.
Looking only at Revenue is a false reality if we are not looking at the cost associated with that Revenue.
This is done not with huge sweeping and drastic cuts but with many snips at specific threads. Obviously the cost of frames, but all the costs associated. Ask yourself how much does it cost for your staff to meet with salespeople each week/month? How much are you spending obtaining warranties on broken frames? How long are they on hold with vendors? And how much more could be accomplished if some of that was reduced or eliminated?
Hometown is driven to provide the end consumers with the best eyewear possible in each price category. Most eyewear companies "SAY" this….we back it up.
So much in our industry promotes Revenue. But you need to look at a larger picture of Revenue, Profits and Margins!
Let's first touch on what the terms truly mean. We can then move to how we can squeeze more from our existing business without pain.
Revenue - This is how much Capital (money) comes into the firm.
Net Profit - Revenue minus all of the costs associated. This includes staff time business overhead
Gross Profit- Revenue minus all cost directly related to the sale of your frames i.e staff time selling, dispensing, checking in frames etc.
Margins - The difference between the price of your frames (i.e. your insurance reimbursement) and the cost of your frames. This is your ratio of profit to revenue
Revenue, Profits and Margins.. Oh my!
In many cases, when a true analysis of the whole process is calculated, we find that offices are losing money in the Gross!
Example: $100 List price with a discount of 15%
$85 - your frame cost
$300 - Retail Frame Price
$180 - Insurance Payout
Your ROI is $15 and only 17.65%
If you look at Net Profits it gets worse. You have to calculate the labor cost into that ROIto get your Gross Profit (How much do you have in labor ordering that frame, checking in that frame, shipping the frame and time to sell that frame.) If it is even 1 hour of time that you paid your employee, you are upside down in that frame! Your ROI is falling into a negative number!
You could buy higher cost frames to increase your Revenue...but you will end up with similar results every time.
How do you Fix this?
If you change the Cost of Goods sold from $85.00 to $7.00 your ROI jumps dramatically to 1,328.57% or a $93 gain
Different Profits on the Same Revenue!