A Real Retailer Asks……

This is a new series that I am doing that will highlight an individual retailer and give her a chance to ask me any question.  As your retail profit mentor and your retail maven I will be honest and direct when giving advice.  Without further ado, allow me to introduce you to Pam Blondin.  We will start with a brief description of her store!

Deco Raleigh is an eclectic, colorful gift store with an edgy, smart sense of humor located in Raleigh, North Carolina. A large and ever-changing assortment of goods includes wares from more than 60 local artisans and offers unique gifts for just about everyone. As one customer put it: Deco Raleigh has nothing that you need, but everything you WANT.

There is much I love about my store.  First, my customers are awesome. They are a true demographic representation of Raleigh, and many of them pop in to say hello or just browse on a regular basis. They feel comfortable sharing suggestions and ideas, and I love seeing them around town.

Second, I love building something new and special. I love mentoring my artisans and helping them make money. I love the huge potential of my location, a block from our state capitol building, and the fact that my store has become an anchor for a budding area in Raleigh. I also love building relationships with other businesses, art galleries and economic development folks. My customers are extremely supportive and enthusiastic, and the store has already been on two “best of” lists in the area. That’s fun!!

A REAL RETAILER ASKS:  My frustrations mostly have to do with my own limitations and are mostly administrative. I am new to retail and the store has succeeded more rapidly than I could have hoped (I opened November 2012 after 30 years as a non-profit executive). I have been able to apply a lot of my experience to this new world, but I have not mastered other things as quickly as I’d like. Managing cash flow has been challenging because it is always changing!  I have heard this quote: “Cash flow management is nothing until it is everything.”  I understand it now. How can I stay on top of that better?

CATHY, THE RETAIL MAVEN ANSWERS:  What an excellent question.  It is one that all store owners struggle with.  First of all you have to know exactly where you are.  Then you have to determine where you are going.  Many store owners aren’t willing to do the work necessary to stay on top of this.  Figuring out your cash flow isn’t the sexiest part of the business, but the feeling you get when you no longer have to worry about it IS pretty darn fabulous.

To determine where you are, pull together the following information and insert it into the equation.

Checking Account Balance
+ undeposited funds
– all accounts payable
– sales tax from last month
– payroll tax owed
– credit card balances to be paid off this month.  
= your cash position

Your cash position tells you exactly where your cash stands right now.

Next fill in the following equation with your own information to determine where you will end up.

Your cash position
+ your projected sales for the rest of the year
– how much you plan on spending for inventory
– what your monthly expenses are (times the number of months left in the year)
= your year end cash position

For most of you this is the first time you have ever looked at your numbers in this way.  It IS sexy to end the year with a better cash position than when you started the year!  That is what makes this worth doing.

The BEST part of this is that you are looking at it NOW.  There is plenty of time to make changes if you don’t like the ending cash position.

To determine your cash flow through the rest of the year:
Year end cash position
– beginning of year cash position  
= total year cash flow

You can get your monthly cash flow (and cash position) by projecting your numbers out for each month and running them out monthly through December.  The beauty of it is that you can then see when cash flow will be tight and make adjustments for it now.

Any questions about this, just ask! Any questions that you want answered, just ask!