Management Audit Form for Small Retailers
A Look at Yourself and Your Ability to Grow
 Do you keep abreast of changes in your filed by subscribing to leading trade and
general business publications?
 Do you plan for a profit (your net income) above a reasonable salary for yourself as
manager?
 Are you an active member of a trade association?
Customer Relations
 Do you purposely cater to selected groups of customers rather than to all groups?
 Do you have a clear picture of the retail image you seek to implant in the minds of
your customers?
 Do you evaluate your own performance by asking customers about their likes and
dislikes and by shopping competitors to compare their assortments, prices, and
promotion methods with your own?
Personnel Management and Supervision
 Do employees in your store know to whom they each report?
 Do you delegate authority to those immediately responsible to you, freeing yourself
from unnecessary operating details?
 Do you seek employees’ opinions of stock assortments, choice of new merchandise,
layout, displays, and special promotions?
 Do you apply the concept of “management by objectives,” that is, do you set work
goals for yourself and for each employee for the month or season ahead and at the end
of each period check the actual performance against these goals?
Merchandise Inventory Control
 Do you keep sales, inventory, and purchase records by types of merchandise within
your departments?
 Do you control your purchases in dollars by means of an open-to-buy system?
 For staple and reorder items, do you prepare a checklist (never-out list) that you
check against the actual assortment on hand?
 Do you make certain best sellers are reordered promptly and that slow-sellers are
processed swiftly for clearance?
 Are you taking adequate safeguards to reduce shoplifting and pilferage in you store?
Budgetary Control and Productivity
 In controlling your operations, do you frequently compare actual results with the
budget projections you have made; and do you then adjust your merchandising,
promotion, and expense plans as indicated by deviation from these projections?
 Do you study industry data and compare the results of your operation with them?
 Do you think in terms of ratios and percentages, rather than exclusively in dollarsand-cents?
 Do you use a variety of measures of performance, such as net profit as a percent of
your net worth, stock turnover, gross profit margin per dollar of cost investment in
merchandise, and sales per square foot of space?
Buying
 Do you regularly search the market for merchandise, prices, and sources rather than
relying too much on established sources?
 When reordering new items that have show volume potential, do you make it a point to
order a sufficient number?
 Do you keep up assortments through important selling seasons, despite the possibility
of markdowns on the remainders?
 For goods having a short selling season, do you predetermine when first orders are to
be placed, when retail stocks are to be complete, the extent of the peak selling period, the
start of clearance, and final cleanup?
 Do you take advantage of all available discounts and do you include them on your
written orders?
Pricing
 Do you figure markup as a percentage of retail selling price rather than as a percentage
of costs?
 Do you set price lines or price zones?
 Do the prices you set provide adequate markups within the limits of competition?
 In pricing new items and evaluating cost quotations, are you guided by what you think
the customer will consider good value?
 Before marking down goods for clearance, do you consider alternate ways of selling
them – special displays, repackaging, or including them in a deal?
Display and Layout
 Are window displays planned to attract attention, develop interest, create desire, and
prompt a customer to enter your store for a closer inspection?
 Do you give as much attention to your interior display as to your windows?
 Are items that customers may not be specifically looking for but are likely to buy on
sight (impulse) displayed near store entrances and at other points that have heavy traffic?
 Are your cash registers well located?
Are nonselling and office activities kept out of valuable selling space?
 Do you receive, check, and mark incoming goods at central points rather than on the
selling floor?
Advertising and Sales Promotion
 Do you advertise consistently in at least one appropriate medium: newspapers, direct
mail, flyers, local television, or radio?
 Does each of your ads specifically “sell” your firm in addition to the merchandise
advertised?
 Do you regularly and systematically familiarize your salespeople with your plans for
advertised merchandise and promotions?
 Do you consult your suppliers about dealer aids helpful to the promotion of their
merchandise in your store?
 Do you use cooperative ads with other merchants in your community?
 Do you conduct a continuing effort to obtain free publicity in the local press or
broadcast media?
Cash and Finance
 Does someone other than the cashier or bookkeeper open mail and prepare a record of
receipts to be checked against deposits?
 Do you deposit all of each day’s cash receipts in the bank without delay?
 Do you calculate your cash flow regularly and take steps to provide enough cash for
each period’s needs?
 Do you have a line of credit at your bank, not only to meet seasonal requirements but
also to permit borrowing at any time for emergency needs?
Credit
 Do you have a credit policy?
 Are your bad-debt losses comparable with those of other similar retailers?
 Periodically, do you review your accounts to determine their status?
Insurance
 Is your company’s insurance handled by a conscientious and knowledgeable agent?
 Have you updated your insurance needs to ensure adequate protection for buildings,
equipment, merchandise, and other assets, as well as for public liability?
Accounting Records
 Do you have your books balanced and accounts summarized each month?
 Do you use a modern point-of-sale register for sales transactions and modern
equipment to record accounts receivable?
 Do you keep data on sales, purchases, inventory, and direct expenses for different types
of merchandise?
Taxes and Legal Options
 Do you retain a tax accountant to review your accounting records and prepare your
more complicated tax returns?
 Do you retain a good lawyer to confer with on day-to-day problems that have legal
implications?
Planning for Growth
 Over the past few years, have you done much long-range planning for growth?
 When you find that change is called for, do you act decisively and creatively?
 Do you make most of your changes after thoughtful analysis rather than as reactions to
crises?
 Are you grooming someone to succeed you as manger in the not-too-distant future?