Question from Beatriz: “How do you start paying yourself every month if there’s not enough money in the bank to cover even regular expenses?”
This is a great question—and it’s one that so many retail owners ask! Because here’s the truth: paying yourself needs to be a priority. If you’re not paying yourself, it’s a red flag that your business isn’t really a business yet—it’s just a (very expensive!) hobby. And I’m willing to bet that’s not what you intended, right?
So, let’s talk about how to get your business back on track and into a place where it’s paying for itself, and for you. It starts with identifying and plugging the cash “leaks” in your store.
4 Cash Leaks in Your Retail Business Keeping You from Paying Yourself
If you’re struggling to pay yourself, there are likely holes in one or more of these areas in your business:
- Finances – Your margins, cash flow, and profit are crucial. Are you consistently hitting the right margins to support a sustainable business?
- Inventory – Too much cash tied up in slow-moving (or, even worse, non-selling) inventory is a killer. Your inventory needs to work for you, not against you. Check out this post about the right way to clear out non-selling inventory.
- Team Efficiency – Are you doing everything on your own, or is your team underperforming? A productive team is essential to keep your store running smoothly and your costs in check.
- Marketing – Inconsistent marketing and a lack of a clear customer avatar mean that you’re not connecting with customers effectively. If you’re not clear on who you’re marketing to, it’s tough to attract the right shoppers.
How to Fix These Leaks to Start Paying Yourself
In our RETAILMavens Coaching program, we work with store owners just like you to plug these cash leaks so you can start paying yourself—and making a profit! Inside the program, you’ll find on-demand video lessons that dive deep into each of these areas so you can strengthen them one by one.
But if you’re looking for an immediate action step, here’s my biggest piece of advice:
Raise Your Prices!
Yep, it’s that simple—and yes, it’s that impactful. Raising prices is something you can do today to help boost your margins and free up more cash for expenses and owner’s pay.
Here’s how to think about it: Aim for a 60% initial markup across your store, which translates to multiplying the cost of an item by 2.5. Now, I know this isn’t always possible with every product—especially if you carry brands with MAP pricing (minimum advertised price). But that’s where your product mix comes into play.
Look for opportunities to add items where you can push for even higher markups. For example, some items might be able to carry a markup of 3x the cost. These higher-markup products help balance out the ones where you’re limited by MAP pricing, ultimately improving your overall margins.
A Quick Challenge for You
So here’s my challenge for everyone reading this—not just Beatriz! Go through your inventory and pick out a few products that you currently have marked at keystone. Bump up that price!
Go make this change right now!
If you’re ready to dive deeper into the other areas we talked about, I have a free class where I go into each of these cash leaks in more detail. In this class, you’ll see exactly how we work to plug these leaks and help you build a more profitable business inside our coaching program.
Let’s get you on track to paying yourself and building a thriving store!