We are often asked by small business retailers for business help when it is too late. In this article, we outline steps any retailer can contemplate from them moment they realise their business is in trouble, from the first thought that closing may be the only option.
If your retail business is in tough times and facing possible closure, you may be able to save it if you act quickly and ruthlessly. Based on years of working with many different retailers, we have found some basic steps can successfully turnaround a business in trouble. But you need to be ruthless.
- Know your truth. If you run a computer system, analyse the data it collects. If you don’t know how to do this, find out. Look for surprise information in your data, things you did not know about your business. For example, look at the top selling items. If there are surprises there they could inform other decisions you make to urgently address your situation.
- Trim employee costs. Cut employee hours and work more in the business yourself if you are not doing so already. While this can have a significant personal cost, the less you pay others the more be business benefits in financial terms.
- Trim overheads. Cut everything you can: cleaning, power usage, insurance, freight, banking. Look at every supplier relationship you have and see if you can negotiate a better deal to cut your operating costs. However, do not turn off lights as darkness is death in most retail businesses.
- Stop unprofitable behaviour. If you are doing things in your business which lose money or do not contribute to a good future for the business, stop doing them. Regardless of history or what your business might stand for, continuing with unprofitable activity only makes your situation worse.
- Quit dead stock. If you have stock on the shop floor which is old – ‘old’ can vary between product categories – and for which you have already paid, quit it. However, stock that is greater than six months old is a reasonable guide – then take action to sell this at a substantial discount.
- Cash matters. Converting anything you have fully paid for to cash has to be your key goal.
- Different retail options. Maybe a right or left turn away from what your business has been is an answer.
- Move things around. If your business is in trouble it is likely that it has not changed much in recent years. Change it. Move departments around, shake things up so your customers trip over things they did not think you sold.
- Review prices. Look at the common items you sell, consider a small increase in your prices. It could be a small increase will not hurt sales volume yet will add profit to your bottom line.
- Upsell well. At the counter, work to extend the basket for every sale possible. Do this with clever counter product placement and witty and engaging banter with customers offering upsell products. You goal has to be to make more from each customer.
- Market within your budget. Photocopied black and white flyers designed with care can be cheap and effective.
- Get suppliers to help. Suppliers often have old stock themselves which they want to quit at a substantial discount. Buy items you have not stocked before, negotiate good prices and put the stock out with a healthy margin but still at a discount to what others would be charging. Negotiate to pay once you are paid by customers.
- What assets can you sell? Do you have computers, retail fixtures, vehicles or other assets you no longer use in the running of the business? If they are not being used, turn them to cash as quickly as possible.
- Get a job. If you have a partner in the business with you and the business can run with one partner, one of you should get a job outside the business. This is especially helpful in a husband and wife situation where the family income can benefit.
- Talk to your landlord. A good landlord will prefer a good business to stay rather than have then close down and a new tenant having to be found. Talk to the landlord, be honest with them about your situation. Given the landlord all of the information they need to make the decision you need them to make. This information will include sales figures, expenses and margin information. Usually, the more transparent you are with the landlord the more they will support your business.
- Talk to colleagues. If you have nearby business colleagues in the same line of business, they might have stock they are happy to provide you for free or at a discount to give you stock to move for a good price.
- Deliver amazing customer service. When serving customers be the perfect shop assistance and not the owner of the business facing closure. Keep your mind on the job at hand and not the cliff you’re worried might be a few steps ahead.
- Whoever is pressuring you the most to close or contemplate closing, talk to them. If it’s a supplier, the tax office or some other organisation or individual pressuring you about debts, be upfront with them, lay out for them your plan detailing the action you will take to turn your situation around, be clear about what you are doing and outline a timeline step by step for them. Seek their support.
- Set a timeframe. Decide where you want to be in a week, four weeks, eight weeks, twelve weeks. Set realistic goals. Measure yourself against those goals. Know what you will do if you fall short.
No two situations are the same. No situation is impossible. No business is dead until the doors are closed for the last time.
Never give up. Fight hard and fight smart to turn your business around.