If you’re an independent retailer, you’re now right in the middle of the golden quarter, and might well be seeing a period of frenzied activity. You will be hoping for yet more sales boosts, profit jumps galore and inward cash flow. As Wilkins Kennedy’s Phil Mullis explains, with careful planning you can achieve all three …
Keeping your cash flowing at Christmas is key. After all, it is the lifeblood of your business. Here are a few answers to some commonly-asked questions, to keep that cash flowing for a happy Christmas …
Do your forecasts!
If you haven’t done so already, you need to run your cash flow forecast now! How much stock are you going to need? When will you have to pay for it? When is the cash from product sales coming in? Keep the cash flow model updated daily, if you can.
Keep suppliers in check
Are you sure they are able to deliver on time, every time? If they can’t, that’s no good for you. Think about alternative suppliers as back-up – indeed, the back-up may become your front-line supplier of the future.
Don’t tie up too much in stock
It’s crucial that your store is always well stocked, but frequent ordering could help reduce the burden of stock overload. This should also help free up your cash flow.
Go easy on staff numbers
Staff numbers can be tricky to quantify, as you don’t want an empty shop full of staff with nothing to do. Having said that, you do need to have enough hands on the shop floor when you are busy. Think realistically about how many you will need – perhaps think of your Saturday afternoons and base it on that.
Check out funding options
Check your banking facilities – is there adequate access to working capital should you need to purchase additional stock? There is nothing worse than having stock-outs on high margin lines.
Don’t be a keen discounter
Is there an opportunity to push slow-moving stock at a discount to generate that cash elixir, and purchase the good stuff for re-sale? You also need to be mindful that slow-moving stock is cash tied up, and is likely to be heavily discounted come the January sales.
“Losing profit is never ideal, especially in terms of cash flow, but if you have to discount any lines, try and wait until as close to Christmas as possible”
Remember that discounting should avoid crossing over your bottom line. Losing profit is never ideal, especially in terms of cash flow, but if you have to discount any lines, try and wait until as close to Christmas as possible. Avoid discounting just to get customers through the door – it could be a disaster for your profits.
Don’t be afraid to barter
Make sure you are always getting the best terms from your suppliers. Don’t be afraid to barter and see if you can perhaps exchange goods or services, such as gift certificates, to help keep the cash flow exchange in check.
Know your taxes
Simply knowing things like your potential liability is important to help you proactively plan and reserve proper amounts to hand over to the tax man, when the time is right.
A retailer who plans their buying, inventory and cash flow should be a success and have a very happy Christmas. If you’re not sure whether you’ve got the right model, get help, and do it now – you won’t regret planning for success.
Phil Mullis is a partner at top 20 UK accountancy firm, Wilkins Kennedy LLP. His specialist sectors include IT, shipping, food brokerage and high street retail. This article was published in the December issue of Furniture News magazine.
