Whether you call it your bankroll, your finances, or how much money you have in your pocket, cash flow is its movement in and out of your business.
Every retail store owner knows that cash is the heart of their operation but oftentimes you have ongoing expenses that may have to wait until you get the sales in. After the pandemic and with supply lines out of sync with demand it can be more stressful to try to balance the books.
What is Cash Flow?
Cash flow is the movement of money in and out of your business true but it is also available funding to meet your obligations like payroll.
As any store owner who has had to make payroll in a bleak month like January, it's all about planning ahead and limiting payouts.
August is a good month for retailers to pause and look ahead to the holidays and the cash flow they'll need to get there without too much sweat.
While the month may be slow in terms of customer count - unless you do great back-to-school business - August is the perfect time to examine your revenues and expenses through the rest of the year.
Many demands will be placed on your cash flow as the holiday shopping season heats up. While these strategies are primarily designed to help you in the last quarter of the year, they must be implemented in August to be effective and improve your cash flow.
Here are five cash flow tips that will help you best place your energies:
1. Invest in Inventory – You already know over half your business will be conducted from Halloween until the end of the year. Be proactive about this opportunity. Buy appropriate holiday stock early to get substantial discounts (but be careful of manufacturer bundles) and to ensure that you have plenty of inventory during the holiday season. Yes, right now it is a crapshoot - I heard one toy manufacturer rep tell a customer their supplies from China wouldn't arrive until November - but don't let that lull you into waiting. You'll pay too much if you wait until the best-sellers are sold out. Don’t be too afraid if you overbuy, just clear it all out by the holiday event.
2. Review Your Employees – Employee reviews, which should be done every 90 days, are especially important in August. Now is the time to determine which employees are keepers and which should go. Yes, there can always be the bottom 10% of your workforce that can be culled. Then come up with a plan to train those remaining how to sell. There is no sense wasting valuable payroll dollars on dead-weight. If you hate working with them when it's slow, you will make yourself miserable when it's busy.
3. Get Vacations Out of the Way – This includes your own and those of your most valuable employees. August is downtime and you can afford to run a leaner ship. If you forget this, your best people will try to take their vacations as it gets cooler and that will cost you sales.
4. Keep an Eye on Payroll – One of the most overlooked and easiest ways to immediately improve your bank account is to reduce hours during the summer months. This task can be accomplished by lowering hours across the board or empowering managers to let people leave early during slack times. It’s a win-win situation as your employees love having some more free time during the summer and your bank balance appreciates the break. With many stores running lean, this would also be a good time to look at any overtime as a chance to change your master schedule.
5. Take A Short Break and Reevaluate Your Store – Your bank account during the summer can be impacted by everything from the shrinkage of fancy leather shoes left too long in the heat of a display window, to a malfunctioning front door that increases your energy bill, to an employee who turns the thermostat down to 60 and freezes up your a/c and necessitates a service call. Take a break and do a walkthrough. Look for simple and affordable fixes and cost-saving initiatives that will increase your cash flow. It’s easier than you think.
The old saying, "It's not what you make, it's what you keep" only happens when you are able to pay your bills and keep new merchandise coming in. Be stingy before adding new lines and make sure demand is there - and you aren't just buying what you like, but what will sell.