this is your presentation title...your store should consider collecting sales/use tax in every...
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President Trump’s proposed t ar iffs on $200 billion worth of Chinese goods
Including over $10 billion on vinyl, wood (engineered and solid), bamboo, cork, carpet (tufted and woven), quartz, and ceramic t ile (glazed and unglazed).
Source: https://fcnews.net/2018/08/flooring-industry-braces-for-tariffs-on-vinyl/ and http://www.sapdistribution.com/industry-news/trade-wars-tariffs-and-the-flooring-industry
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The tariff will start at 10% but could increase to 25%by year end.
I don’t import, why should I care?
Trade Statistics
◉2012 - Chinese manufacturers were 22.9% of total U.S. hardwood sales (only 5.4%in 2007). ◉2016 - Imported Manufacturers were 33.7%of hardwood sales ◉2016 - US Manufacturers were only 55.7 percent of total square footage (Imported 44.3%).
2007 2012 2016
94.677.1
66.3
5.422.9
33.7
HARDWOOD FLOORING WHOLESALE SALES BY REGION
US Imported
Trade Statistics
◉2007 - average import prices were only 7.6% below average selling prices of U.S. manufacturers. ◉2015 - that gap rose to 53.1 percent.
Tariffs will…
◉Likely accelerate the movement toward US based manufacturing, at least in the long term◉Hardwood flooring may benefit as the tariffs on LVT/LVP products will narrow the price gap◉Drive costs to go up…
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“ … but in this world nothing can be said to be certain, except death and taxes.”
Benjamin Franklin
The US Tax Cuts and Jobs Act changed over 75 laws regarding business taxes!
Did you know…
21%New Corporate tax rate for all companies… No more brackets!
https://www.irs.gov/newsroom/the-highlights-of-tax-reform-for-businesses
What was it?
◉South Dakota files case against Wayfair for failure to pay sales tax for sales conducted in their state◉Escalated to US Supreme Court◉5- 4 majority that statesmay chargetax on purchases made from out- of- state sellers, even if the seller does not have a physical presence in the taxing state.
https://en.wikipedia.org/wiki/South_Dakota_v._Wayfair,_Inc.
What does that mean for my store?
◉Your store should consider collecting sales/use tax in every jurisdiction you do business in – even in out of state situations◉You should use Cities List in RFMS to help you manage◉ Consult your tax professional to confirm your setup
96◉31 States with Tax regardless of presence
Sales & Use Tax Rates are increasing!
◉Texas is proposing raising sales tax by 1% making most cities 9.25%! (after local taxes)◉Increased sales and use tax impacts your customer and you!
Who has the highest sales tax in the country?
Let’s play a game!
9.10%
9.15%
9.46%
9.41%
10.02%
Source: https://files.taxfoundation.org/20180212171639/LOST2018.png
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The tighter you squeeze, the less you have.
Thomas Merton, Author
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I can’t control taxes nor tariffs..
What can I control?
Your Costs
Your Customer
Your System
Control your Costs!
◉Shop Around! ◉Raise Prices◉Escalation Clauses◉Bundle Services◉Negotiate Service Costs◉Reduce Overhead
Shop Around
◉Dual Distribution◉Consider unconventional sources◉Negotiate your costs
Raise Selling Prices
◉Average gross margin for floor covering stores is 33.9% in 2018 (down almost 2% from 2017)◉Is it time for you to raise your prices?◉Make sure your selling price includes use tax, freight, and other burden costs
Escalation Clauses
◉Append contracts with an escalation clause if the products on the contract are subject to tariffs◉These can help protect you from unknown price increases◉ “The Contract Price . . . shall be equitably adjusted by Change Order for additional costs . . . resulting from any change in Law, including increased taxes, enacted after the date of this Agreement.”
Bundle Services
◉Ever been to a car wash?◉Have tiers of packages (Gold, Silver, Bronze) and include different services in each
Lifetime Warranty
Recycle your old floor
Removal of Flooring
Furniture Moving
Expert installation
Appliance Moving
12 Months Same as Cash
50% off Annual Cleaning
Free measure
Baseboard Work
Delivery of your floor
90 days same as cash
Gold SilverPlatinum
Next day installation
3.50 3.00 2.00
Choose your InstallatIon!
Negotiate your Service Costs
◉Renegotiate with your installers◉Have a fixed price list for all installation services◉Use tiered costs for special exceptions◉Learn the Provider Rate Matrix (more on this later)
Reduce your Overhead
Reduce Overhead
◉Use tools like RFMS Business Insights to benchmark your profitability to your peers◉See where your company is overspending◉Use software to automate tasks to make staff more efficient
Control your Customer
◉Effective advertising campaigns- draw them in the store◉Use CRM to help better engage customer – nurture very lead!◉Construct a Pre- sales funnel –consistency will guarantee results!
Control your customer
◉Wow them with technology- don’t lose the sale to other industries◉Help them best answer WIIFM- let flooring be the only choice!
What’s in it for me?WIIFM?
A few reasons people buy…
ComfortSeCurity
Safetyimage
SolveS a problem
featureS
relationShip
invention
emotion
unique
performanCebenefitS
quality
Control your System
◉Cities List◉Add Overhead Margin◉Add Freight Factors◉Add Loads◉Pay Commission based on Gross Profit Margin◉Use several Price Levels◉Update Price Tags frequently◉Product Templates◉Learn the Provider Rate Matrix◉Monitor your costs with reports
Cities List
City Record
◉Tax Methods- Use Tax- Sales Tax- Line Tax
Overhead Margin
• Add cost using Overhead margin
• Consider what you want your overhead margin to cover
• Rent• Advertising• Admin Wages
FREIGHT FACTORS
◉The freight factor is used for job costing purposes only. ◉If no freight appears on the supplier invoice, use the freight factor established with this option.◉Percent of Gross Cost or Per Unit Cost◉Set Globally or Product/Invoice Specific
FREIGHT FACTORS
◉Set up in System Options for a “global” freight factor on all roll goods
FREIGHT FACTORS
◉Set up in Products individually or via General Range Edit
Select Freight Factor when Costing Invoices
Loads
• Use Loads to add a cost to a product “on paper only”
• Helpful for tariffs or taxes on paid on specific products
• Use to control cost on goods you have negotiated a good cost on
• Can set individually on each product or globally through General Range Edit
Where are loads?
Using General Range Edit for Loads and Freight Factor
◉Products File General Range Edit
How to determine your Freight Factor and Load Amounts
◉Use Material Analysis sorted by Product Code for total quantity and total cost by product code (or vendor, etc)◉Get total freight expense from Income Statement
How do I calculate a Freight Factors and Loads?
Material Analysis Total Cost
Income Statement Freight Cost
Percent Cost Relative to Freight
How do I calculate a Freight Factors and Loads?
Material Analysis Total Quantity
Income Statement Freight Cost Per Unit
Freight Cost
Commission Schedules
Price Levels
Price Tags
• Print tags as costs change
• Use Update Products tool to automatically tag new products with a price change
Product Templates
Learn the Provider Rate Matrix
◉Create variations to your service costs◉Costs can be based on skill level, job type, location, customer, or installer name◉Free! (after training)◉Human Resources Utilities Provider Rate Matrix
Provider Rates Matrix
Monitor your Costs with Reports
◉Several reports in RFMS can help!• Job Cost Sheet for each order• Baseline (new baseline report for all orders)• Job Cost Analysis• Business Insights• Material Analysis for line level reporting
Time for a riddle…
What is the difference between a taxidermist and a tax collector?
The taxidermist takes only your skin.(famously said by Mark Twain)
Any questions ?RJ PetersenDirector of Training & Implementation800-701-7367 x [email protected]
Thanks!
