SIA Member Services; Run Your Business Better: No Charge

Turns out there’s more to it than that. SIA offers its members no charge services that, if utilized correctly, will add to your bottom line. The mystery is why so few members utilize them. Maybe a little publicity will help.

 

The Credit Services Program gives companies a picture of the payment status and credit quality of retailers they are doing business with. Produced seven times a year (January through May, August and October), this report shows the amount and status of all reported debt more than 60 days past due. It includes not only information supplied by SIA members, but by the credit associations of other action sports trade groups.

 

The report I received in August was about an inch and half thick. The only cost to participate is the time it takes to complete a form which shows the name and address of the account and the amount 60 days or more past due. There’s room for a short comment on the account status.

 

The information is reported by a member number. The name of the reporting company is not disclosed except to Riemer Reporting Service, which assembles the data.

 

Let’s say you’re doing about $2,000,000 in business annually (an estimate of the mean revenue of SIA members). Your business continues to be highly seasonal, and your customers are demanding better payment terms. SIA reports that overdue accounts represented 4.8% of sales at wholesale, or $96,000 for your typical SIA member.

 

Not all of that will ultimately be uncollectable. But after taxes, a lot of businesses are lucky to drop 4.8% to the bottom line. Better management of your bad debt expense can easily be the difference between a profit and a loss.

 

The in season cash flow affects are harder to illustrate, but may be more important. As I’ve said in this space before, companies pay their bills with cash, not with profit. A lot of snowboard industry companies live hand to mouth during the period between the arrival of product and collection of receivables.

 

What happens if, on average, your collection period goes from 60 to 90 days? How much more money will you have to invest in the business? Where will you get it? What will it cost?

 

Just for fun, let’s say you can borrow money at 10% annually.  To carry $2,000,000 in receivables an extra 30 days costs you about $16,700. The calculation is oversimplified, but you get the picture.

 

SIA’s Credit Services Program is part of an effective program to reduce your bad debt exposure. Checking credit references is important, as is your history with the account. But nobody ever handed out bad credit references, and conditions change from year to year. If by participating you can sell more product to accounts that pay, and pay on time, isn’t it worth the few minutes it takes to fill out and send in the form? You bet.

 

Often, public relations doesn’t make it on our radar screens, though when somebody says “advertising and promotion” we perk up and get out our check books. To paraphrase Clauswitz, public relations is advertising and promotion carried on by other means. Working with SIA, you can do some good public relations work that’s inexpensive to free.

 

Sort of my accident I got my hands on SIA’s New Products, Best Values publication. This annual publication, distributed to hundreds of media people and anybody else who wants it, gives each company a chance to briefly describe its latest products. Having a listing is free, but only 30 board companies participated this year. Since the show, SIA has distributed about 1,200 hundred copies.

 

We spend six or seven thousand dollars on a Transworld ad that we wonder if anybody is going to notice, but we won’t take the time to get some information in the hands of people who are specifically requesting it.

 

Call SIA and get their free booklet on press relations. Tell them you want to participate in New Products, Best Values. Then call them again and ask what you should be doing about public relations and how you can do it. The information and advice you can get for free would cost you thousands of bucks from a public relations firm.

 

Finally, there’s the Cost of Doing Business and Compensation and Benefits Survey. It’s just as expensive as all these other SIA services; you got to participate.

 

Inaugurated only in 1994, this survey is focused on developing accurate financial information on the snow sports industry. Only participants receive the report. The submitting company is known only to an outside accounting firm that receives the information. The tabulated data is released only in composite form. It shows expenses as a percentage of sales, not in hard dollar terms. In other words, participants are well protected from disclosure of proprietary information.

 

The data is broken down by small and large companies (with $5 million being the cut off) and by hard and soft goods. Right now, limited participation is making the information less valuable than it will ultimately be. Only 82 companies (out of an SIA membership of 850) are participating, but less than 20 are snowboard or snowboard related. SIA is prepared to run the data for snowboard companies separately as soon as there’s enough participation to make the numbers meaningful. 

 

There are two basic reasons to participate. First, it will let you know how you’re doing compared to other companies, highlighting what you’re doing right and where you can look to improve. Second, it can be very valuable in dealing with your bank or other financing sources.

 

For most industries, banks have “common sized” financial data that allows them to compare your company to others in its industry. Not so with snowboarding; until now. This kind of data is something of a security blanket for bankers unfamiliar with an industry. It will allow you to explain how your company is doing compared to similar businesses. The fact that you even have this data and have considered its implications will improve your credibility, giving you and your banker a common point of reference.

 

Using SIA’s services and information correctly will improve the way you manage and finance your business. Do yourself and the industry a favor; participate. Fill out the forms and send them back.