Selling a great product while providing exceptional customer service, makes up the nuts and bolts of building an ever increasing flow of customers.
Unfortunately, managing a retail store takes a heck of a lot more than an awesome sales team; it also takes solid cash flow management and attention to the details.
November, and the all important "Black Friday," marks the day when many retail stores show a real profit, for the first time all year. How do you manage cash flow? What do you do with your November earnings? Deciding how to allocate your cash flow is a big part of what determines your success.
Here are 3 mistakes independent retailers make during the November rush, and how to avoid them:
1. Uncontrolled payroll spending - Many retailers over book employees during the holiday rush. After all, you build good customer relationships by keeping your lines short, right? Wrong! During the holiday season, shoppers expect to wait a little longer. Sure, you need extra coverage during the busiest times, but don't just add full shifts. Be like the bigger retailers and build a budget, then stick to it. That will keep you on target for your cash flow goals.
2. Buying too much extra inventory - Placing vendor orders in November means you didn't plan ahead in August through October. This is never a good sign. It usually means added shipping costs which reduces margins. Placing a few, normal fill-in orders is great, stocking up your store for the next three months is not. Inventory sits on shelves gathering dust. The money you earmarked for a massive inventory buy could have been earning you interest, not losing value with every day.
3. Paying vendors now - Staying current with vendor payments ensures timely shipments and increasing lines of credit, but that doesn't mean you need to pay them off, in full, during the holiday rush. Even if you are a bit behind on vendor payments, carefully consider your cash flow and determine how much to allocate to each vendor. If you are already current, there is no benefit to early payment unless the vendor is willing to offer a substantial discount.
Avoid these cash flow mistakes, and you will see a positive improvement to your cash flow in November, and through the rest of the year.
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