Crash Course In Finance

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"One of the first sessions I attended at AQUA was a finance course," says Jack Farley, the president Valhalla Pools & Spas in Wexford, Pa. "In order to understand where the audience was coming from, the facilitator asked, 'Does everybody know that, generally speaking, you have to make a 40-percent margin to make it in the retail business.' There were a lot of nods around the room, so he said, 'OK, if you're buying a $10 item, what do you price it at.' I think 98 percent of the class said $14 instead of $16.67. He said, "That's why you're all here; everybody is underpricing.' He went on to do the simple math and explain that the margin is based on what you sell it for, not what you buy it for. I thought, holy mackerel, even the math is different in retail, so I began looking into other AQUA courses to find out what else I was taking for granted or misinformed about. That was a real eye-opener, because if you're not pricing things right, you're not going to be around very long."

FINDING BALANCE

"I've continued to take finance courses at AQUA, and I have a much better handle on what's happening. I had absolutely no idea about current ratios and quick ratios and all that stuff. Just something like learning to read a balance sheet has really helped me in working with the CPA at tax time and with the banks trying to get loans and things like that. It's even helped me with my stock portfolio, because I have to read P&Ls and balance sheets to assess the value of a company. Another big thing I learned about was cash flow. You can have those times in the year when the money just seems to be pouring in and you think you're doing great and you're really not. It's especially important up here where we're not in a pool season 12 months out of the year. You've got to be very smart in what you're doing."

MINDING MARGINS

"One of the most important things I picked up at AQUA was the need to keep prices up to fairly reflect the value of our products and services. In the big-box stores, they have kids who just stock shelves; they don't know anything about pools and spas. We do have something better to offer, so we shouldn't get down in the trenches with them on pricing. Obviously, then, we have to fulfill the customers' needs and live up to their expectations on service in order to command our prices. I've taken several courses on pricing, how to hold your margins, why you should, and how to go about justifying it. Those are a real psychological pumper-upper."

LEARNING FROM EXPERIENCE

"From an owner's perspective, I really like the dealer roundtables at AQUA, because you get other retailers' ideas. You might be thinking about doing something in your store, and all of a sudden two or three other people will say, 'Been there, done that. Be aware of this, that, or the other thing,' or 'That doesn't work because of . . . .' They've already been through it, and might have just saved you months of work and hassle."

SHOPPING MORE EFFICIENTLY

"I've added a lot of product lines as a result of the AQUA Show, and I'd put in another 20 or 30 if I had the room. I love being able to see the new products in a dedicated environment, with dedicated time, because you can do an awful lot very quickly. We all get inundated with stuff from distributors and manufacturers in the mail, but in the heat of battle every day, with customers and phone calls, you put it aside and never get to it. When I go to AQUA, it's an environment where nothing else is bothering me and I can just walk around and get input from people and really learn about the products. If a question pops into my head, the expert is standing right there. I'm a hands-on guy, I don't want to hear it over the telephone. I like to see it, touch it, talk to the people who designed it. And I love bringing other people from the business with me because they provide a different perspective on new products that I might not give any thought to."

STORE STATS

Jack Farley and a partner opened Valhalla Pools & Spas in the Pittsburgh suburb of Wexford in 1989, just three days after Farley's retirement as a Navy pilot. "I knew absolutely nothing about retail and picked up most of what I know at the AQUA Show," says Farley, who has attended since the start. The business stopped building pools three years ago, and now concentrates on sales, service and installation. The core staff includes Farley's wife, Peggy, and son Jack Jr. With Farley's background in chemistry — he originally trained to be a veterinarian — the business boasts an extensive, fully computerized water-testing lab and has become recognized as the "water problemsolver" in the area. The boutiquestyle store caters to an upscale market with high-end lines of spas, saunas, grills and other backyard products sourced at AQUA. "Every year AQUA gets better and I see more stuff," says Farley. "I always get my juices pumping again and go home with new ideas. We all need to be recharged and reinvigorated."

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