How Retail Cash Flow Issues Surface
Some of the most common reasons our retailers would tell you for why they became clients would be:
- They didn’t have the cash on hand to cover one or many of their expenses
- They never had the right inventory to sell – always having too much of some things and not enough of others.
OFTEN IT’S BOTH
Positive Cash Flow in Retail
Can take significant effort and rely heavily on a disciplined approach in several different areas of your business. Certainly, of those that pertain to the expense control and increased income generation areas, some of the easiest to impact would be:
Being Ready To Pivot
Especially in an environment like we have today with incredible sales volatility in some categories, it’s important to focus your purchasing on a narrow and deep approach. Using the cash you have to fund categories that will turn over quickly and generate cash fast. As category sales change, you want to be prepared to pivot immediately.
Get the Inventory Plan and Analysis You Need
Identifying those categories and products takes sophisticated analysis, a merchandise financial plan, and an assortment plan. By focusing purchases on those categories that sell-through, you can begin generating cash and build on it over time.
During an annual assessment of your business, one of the components we review is your payroll for both associates and management, determining each’s appropriate amounts.
The level of payroll spending to maintain profitability is expressed in a percentage rate of sales. It should flex up and down with your sales.
Identify your payroll easily with our tool.
Now that you’ve found ways to budget payroll and increase turnover through managing inventory to have products in the categories or vendors that your customers find desirable and are inspired to buy, another way to grow sales volume is through associate performance enhancement.
There are metrics for measuring sales associate success that every shop owner should watch. Coaching associates to stronger metrics is one of the most cost effective approaches you can take to increase sales. Your getting more volume for the same payroll spend.