Small business retail advice: how to deal with a cashflow crisis

A cashflow crisis is when you can’t pay your bills on time or a sustained period of dissatisfaction with the cash reserves in the business. Too often, small business retailers ignore a cashflow crisis, leaving action until it is too late. We have put together some basic advice for dealing with a cashflow crisis in local small business retail and share it here with you today:

1. Own the problem. Fixing this is on you.
2. Bring in outside help. This could be a friend, a financial counsellor. The best person will be someone who understands your type of business who can help you see what you don’t see and support you in tough decisions to be made, someone prepared to tell you the truth.
3. Understand the problem. Know if it is short term or long term. Be certain about the role you have played.
4. If you run customer accounts, collect with urgency.
5. Ask the landlord for immediate rent relief. The more transparent you are with them the better. Document your case. Be prepared to show your P&L in support of your request.
6. Cut your roster to bare bones. Yes, this can mean more work for you to cover the needs of the business. However, in a cashflow crisis, your labour cost is the lowest in the business.
7. If you have stock on sale or return and it is not selling, return for credit.
8. Immediately start a sale.
   1. Give it a cool, non scary, name.
   2. Price items to sell, especially items for which you have already paid. Even selling below cost frees cash to the business.
   3. Get everything on the shop floor.
   4. Display to clear. i.e. not pretty displays for sale items.
9. For inventory that you cannot sell, consider eBay.
10. Consider selling assets. If you have equipment in the business that you no longer use, sell it.
11. Talk to all your creditors, apologise, outline your plan, ask for their support and help.
12. When making progress payments on creditors, respect all with payments. NOTE: small regular payments could be key to you not facing debt collection action.
13. Act. Every decision, every action you take must work to addressing the cashflow challenge. If you have created a plan act on it immediately. This is not a time to overthink things.
14. Invest. If your cashflow challenge is because of a decline in traffic, not spending money chasing traffic will only make the problem worse. Spend carefully.
15. Plan for the end point. This will be either coming out on top or closing the business.

The cashflow achieved by a business is a product of decisions in the business. Be thoughtful in each decision and single-minded in your focus on a better cashflow outcome.