Cash flow is on the minds of many local small business retailers right now.
But before we get into providing advice, let’s agree a definition. Cash flow is the flow of money in and out of your business, real cash, in your account, or in your safe. Cash in comes from sales or products and assets and other payments from customers and suppliers. Cash flowing out is for bills, inventory purchases, labour and rent, typically.
Any business wants to be in a positive cash flow situation, because negative cash flow needs more capital inflow to support, and that can come at a cost.
Now, to our advice.
8 ways any local small retail business can improve cash flow and thrive.
Are you ready?! This advice is based on our years of service of thousands of local small business retailers across a range of specialty retail channels. It also comes from many years of us owning and running our own local retail shops.
- Free dead stock. In our experiences this releases the most cash flow value, but it is the option most often rejected for often silly reasons. dead stock is stock that is not selling, not moving. It is often stock you have long since paid for. This means that any money you get for it is positive cash flow right now. The loss from paying for the stock has already been realised – many retailers forget that. So, idea tidy what’s not selling, and quit it creatively, with urgency. Cheer every dollar this brings.
- Trim where you can without impacting sales. The most beneficial move here is typically a cut in the roster, a cut in labour cost. Save a few dollars with no sales revenue impact and you are ahead cash flow wise.
- Get shoppers to spend more in a visit. Smart loyalty software will do this. Points loyalty systems are unlikely to do this. There are better loyalty options designed to help encourage shoppers to spend more in a visit. Our POS software helps nurture this.
- Charge more. Yes, we understand this can be scary. The thing is, if you do this carefully, thoughtfully, and offer a good loyalty incentive and bundle items together, a modest price rise is less likely to be noticed and more likely to have a positive impact on cash flow. Think about it. Plan for it. Take small steps. A 1% rise across your top 200 inventory items could be the small step that delivers the cash flow boost you need.
- Find more customers. The more new customers you have shopping with you the more you will sell, obviously. It can feel easier said than done to attract new customers. In our experience, most local retail businesses do not have a new customer attraction plan. Do you? It does not need to be complex. Even a simple social media pitch honouring a new product, reflecting your gratefulness to have it could be enough. One the post is up, pay for a boost in your area. An $8 spend over 4 days is all you may need to get in front of a few hundred prospective new customers … and that gets you on the path, that could be your new customer attraction plan.
- Trim overheads. Look through your business overheads and look for an opportunity to trim.
- Look at your sales counter. With most purchases being completed at the sales counter, look at it from the perspective of your shoppers and see what you could do to encourage them to add items at the last minute. The counter is a valuable place of influence. Use it. Make sure it is driving deeper purchase baskets, and adding to cash flow.
- Spend less on inventory. Look for suppliers with good inventory holdings that allow you to use them, rather than your shop floor or store room, to hold stock you may not sell right away.
This list is a start, a small start, a modest start, it offers practical advice you can follow, practical steps you can take in any local small business retail setting to improve cash flow.
Using the Tower Systems POS software you can engage with any of these and other ideas for improving cash flow in your retail business.
Beyond POS software, Tower Systems will help, because we want local retailers to thrive. You are our customers, our focus.
Footnote. Many retail business owners get in their head about cash flow, they look for big moves and end up spinning their wheels, going nowhere. In reality, the most beneficial cash flow improvement moves you can make are those that are simple, easy ti implement, immediate to implement and, most important, that work with other moves … for it is the compounding benefit of a series of small steps that can deliver excellent cash flow improvement benefits to local small business retail.