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.

A few years ago, a local retail business we knew well closed, and the owner walked away. They said they could not handle the changes going on around them.

The thing is, the changes had been happening, slowly, for years.

The biggest challenge faced by the retailers is faced by many in local small business retail: how to nurture relevance for your shop in a constantly changing world.

It takes guts to embrace and chase change. The sooner you engage with this the better. This is what we say chase change, because that is what we need to do – go find change rather than waiting for it to come to you. Advice on change and help with it will most likely come from new sources, sources not rooted in your past.

The more you reach outside your usual lane for insights and encouragement the more likely you are to find fresh ideas. the alternatives are to do nothing or complain and do nothing.

Complaining is not a management activity.

Here is some practical advice for any retailer feeling overwhelmed by challenges and, maybe, contemplating closing.

1. Dig deep into your business data and look for green shoots of good news onto which you can attach growth. It will be there, for sure.
2. Stop doing what you have been doing, unless you want the results you have been getting.
3. Rely on retailers for advice as they know more about retail than accountants.
4. Find products that will generate net new traffic in your location.
5. Refuse to be restricted by the shingle under which you trade
6. Change, change and change your business.
7. Listen to your shop floor team members. They often have the best advice.

Change is challenging. It is also essential. Too often we see local small business retailers resist change out of fear, ignorance or an expectation that things will naturally improve. The reality of retail today is that change is everywhere, including where we cannot see. And, this is what makes it difficult for us in that if we can’t see something we may not worry about it.

One of our jobs in our POS software company is to encourage local small business retailers to be the best they can be. Through good use of our software we can do this. But, it starts with desuire, desire for change and the benefits that flow from change.

It’s a new financial year and with that we have new opportunities to consider. Today, we share our advice for small business retailers, local independent retailers, for the 2021/22 financial year. This advice leverages years of experience serving local small business retailers and, in particular, the experience of the last eight months in which the coronavirus pandemic has played a big role.

• Less is more. Many retail businesses can make more money carrying less stock. Yes, we know that sounds odd. But, it’s true. Too many retail businesses are full of stock, often too much stock, to make a shop look full. For some, this is a stack em high watch em fly approach. The evidence in data from hundreds of local retail businesses is that quitting dead stock, freeing space and re-casting the shop floor story can drive sales growth. We know of a shop that early this year cut inventory by 20% and increased revenue by 35%.
• Mine your data. Your business data is your best business guide. Mine it for advice as to steps you can take. We are certain that in every retail business there is data on which they can act for the benefit of the business. The best place to start is dead stock, stock long ago paid for you that has not sold in months.
• New traffic. New shopper traffic is your future. While current traffic is important, it will most likely deliver the success that you are used to. New traffic is net bottom line beneficial. Chasing new traffic depends on the products you offer and how you pitch them outside your business. This is where social media and an online web store play a key role in helping you to reach new shoppers who don’t know about your business today.
• Trim waste. Trim dead stock, trim roster overload, trim expensive suppliers, suppliers who are not cost effective for your operation. Think of this as a whole of business declutter for a leaner and healthier future.
• Listen. There are likely to be people in your business who are not in decision making roles yet who may have opinions worth listening to. Ask them for their ideas. Consider the ideas. be open to changes that could help the business.

This is some of our small business retail new financial year advice. we are grateful to help our customers, through our POS software, in a variety of ways.

Here at Tower Systems, we help small business retailers get more from our specialty retail POS software. One way we do this is through sharing business insights and opportunities, like this about product margin setting.

What you charge for what you sell, what margin you set needs to be carefully considered.  Price is all about customer perception of value.  Value is based in a range of criteria including:

• Convenience.
• Added value – from purchasing from this business.
• Perceived value – how you package a product compared to how others package the same product can lead to a different price.

See, margin is about more than margin from each item, it is equally about margin dollars, gross profits from each sale, eased basket.

To create the best margin narrative for your business, we suggest you …

1. Manage labour to focus on products with the best return to the business. This is a balance between overall gross profit dollars and margin percentage.
2. Look at items with a customer service component, where your expertise is required to make the sale or make good use of the products or where there is a reasonable after sales service component. These can usually carry a higher margin.
3. Look at the items which are unique to your business in your location or nearby. If you are the only store serving the local community then you do have a pricing opportunity. These items can usually carry a higher margin.
4. Assess why people shop at your shop. If they are shopping because of convenience then you have the capacity to charge more for this. This is why convenience stores charge more for items which you can buy elsewhere for considerably less.
5. Involve others in setting sale price. Ask your team what you can charge for an item. Assess what they think you can “get away with”.  By polling team members, you may find that your perception on price is lower than what others expect.

You can build a stronger business by taking small steps each day which focus on new traffic, better margin and improved sales efficiency. No grand plan, no expert strategy – just small steps which leverage opportunities which exist in your retail business.

By paying closer attention to the margin you can achieve, you strengthen the financial foundation of the business and ensure that your return on inventory investment is more helpful to the bigger business plan.

What you do in your business is 100% up to you. Our advice here is for your information, your consideration. By sharing it here our goal is too give you more information to consider, so you can determine the path most appropriate to your own needs.