WHAT TO DO IF YOUR RETAIL BUSINESS IS IN TROUBLE

January 2002

SMARTRETAILERS.com RETAIL E-TIP OF THE MONTH:

WHAT TO DO IF YOUR RETAIL BUSINESS IS IN TROUBLE

A prelude: For those of you who are into the Internet and know something about search engines and search results and for those of you who are not, and before I get into this month’s tip, I wanted to show you something that makes me feel and look pretty good.
Log on to one of the following search engines: Yahoo, AOL, Altavista, Hotbot, Directhit and at least 10 others that account for 75% of all searches on the Internet and do a search for any of the following terms: retail advice, retail consultants, books on retail, retailing and dozens of other pertinent and similar search terms. Guess who comes up at the top, in some cases out-placing millions of other listings on the Internet? I’m not going to tell you. You either must look or settle for a guess.
Hey, if you haven’t bought my book $MART RETAILER$ RETIRE RICH! yet, what are you waiting for? It could help make you hundreds of thousands of dollars. Seriously. Turn over a new leaf this New Year. Get serious about your business. Get THE book on RETAILING for serious RETAILERS at http://www.smartretailers.com. I’m telling you there’s a reason IT’S EVERYWHERE ON THE INTERNET.

Now for my January 2002 Tip. Not to scare you, but this information should be interesting even if you are the perfect retailer, have been in business for 40 years and have everything running as smoothly as you could imagine or hope for. My topic this month is one that not enough people plan for, must be considered yet is seldom discussed. What should you do if you are ever confronted with a time when your business is not doing well enough? When you are so close to breakeven expenses that you are facing a cash crunch and having difficulty paying your bills on time? I said what should you do “if,” but it is more likely that I should say what should you do “when” you find yourself in a difficult financial position. It happens to the best. Few are those that have never been in that position before. Don’t despair. From my experience there are a myriad of things you can do when confronted with this situation. Let’s look at some ideas one at a time.
1.First, when someone quits don’t rehire. I know what you’re thinking. You can’t do without that person. If you didn’t need him or her you wouldn’t have hired him in the first place. Right? Well guess what? You don’t have the cash to pay that person, or if that is one of the expenses you choose to pay then something else will go unpaid. So get over it. One $15,000 per year sales person represents $40,000 in sales for most of you to cover the salary. That’s $800 a week in sales that you can place directly into your company checking account…$320 or so in profits not spent at 40% GP. Big bucks when things are not going well.
2.Work longer hours yourself. Well, if you have someone quit you may quite possibly be forced to work longer hours, but even if your staff remains the same I’ll bet you $100 that if you spend more time in your store on the sales floor that you will see positive results. Customers love to see the owners of retail stores when they shop. It’s good for your business for you to be on the sales floor.
3.Get rid of dead stock and don’t replace it. Selling out on product you have no intention of replacing puts liquid cash in your checking account. Surplus cash…that’s what you need.
4.Cut down on your buying. Only replace stock you sell that is an absolute necessity.
5.If you have business loans with your bank call your banker and set up a meeting with him personally to explain your situation. Don’t paint a bleak picture or a rosy one. Bankers like to know the truth. Tell him your situation as best as you can and ask if it will be possible to delay a couple of month’s payments while you sell off some surplus inventory. Explain everything you are doing to get your business back on solid footing.
6.Do the same with your suppliers. Be honest. Ask if it would be OK to make weekly payments on your outstanding invoices while paying up front for future deliveries.
7.Eliminate all advertising. Cut all of your advertising cold turkey. Those advertising dollars will begin to show up in your checking account within weeks and you will certainly find that much of it was unnecessary. I’d bet my life on it.
8.Don’t pay your rent. That’s right. Of all the people that you must pay, the rent comes last. You need employees. You need product. Rent and advertising can wait. Now, of course sooner or later you will have to pay your rent, but it is one of those things that if delayed can normally give you a little breathing room and negotiating time. When it gets real critical…then talk with your landlord.
9.Fill your store up with all of the product it takes to have it inventoried as well as it should be. That’s right. Fill it up even if you have to borrow money against your house to do it! If you know that you are under inventoried and you know that with more product and the right product you will do more business then what are you waiting for? Turn that new inventory a minimum of once a year and you will make thousands.
Well, that’s my story for this month. There are other things you can do when business is not great, but we covered some of the most important today. Hope it has been helpful. Happy New Year!

Thanks and may your registers always be full,
Jim Nannen
Smartretailers.com

By the way, you can now purchase copies of my book $MART RETAILER$ RETIRE RICH! from Amazon.com as well as my web site: http://www.smartretailers.com.

**This information may be freely used and reprinted anywhere as long as it is done so in its entirety and our web site www.smartretailers.com is credited. Send it to a retailing friend. Thanks.