Do you know The 3 Keys to “Clear it Out” Cash Flow Nirvana?
1. There’s no crying in retail.
Every once in a while, you may find that you made a mistake in your buying. Maybe you reordered just one too many times. Perhaps you ordered something in 3 colors and one was just plain ugly! You might have ordered too many. You know precisely what I am talking about don’t you?
You can’t become emotionally attached – and I’ll tell you it gets more likely that you will the longer your relationship with those ugly items lasts. You remember Susie who was in a co-dependent situation with the $40 vase for FOURTEEN YEARS. That was a true story.
She actually said to me, “Sales never work for me. They just don’t work. I find I have to put it down way too much and I lose all my profit and that just kills me. You really just have to wait until that perfect person comes through the door.”
What should have killed her was that this deadbeat vase was taking up space on her floor, hurting her cash flow, and not paying a dime of rent.
2. If you build it, they will come.
There are two best times of the year to have your cash-flow boosting, super clear-it-out clearance sale. One is right after Christmas and the other time is during sidewalk sale days, towards the end of July or August, or whenever it is in your location. If your area doesn’t have a sidewalk sale then you are going to create your own!
The reason why these times are critical is because you’re maximizing the fact that people are out looking for bargains. The bottom feeders are out. We love our bottom feeders because they get rid of some of this inventory for us. So that’s why you’ve got to make sure that you’re taking advantage of that time to get rid of the inventory. They’re out there looking – build it, and they will come.
3. Divide and conquer.
First, you must divide your excess inventory into good, bad and ugly. One client, Tina, told me, “Oh, Cathy. None of my inventory is good. It’s really much more like bad, worse, and worser!” For sure, some of the merchandise you have in your store should be marked down to 75% off right now. It’s just ugly and has been around so long. There are not very many things that you’re going to take to 75% off, really not much at all. But there are a few things, so be honest with yourself and mark them down and move them out.
Then you’re going to have some inventory that’s bad. That’s the kind of thing if you bought six pieces of it and you’ve had it for six months and you only sold one or two of them. Maybe some of those things need to go to 50% off right away. Again, there will just be a few. You know exactly what they are. I find that retailers always know exactly what I’m talking about.
The majority of the inventory that you’re marking down is good. It just didn’t move for whatever reason and sometimes you just can’t explain it. But you just have to let go and not be attached to your inventory and instead be thrilled about the money you are going to be bringing in. That inventory gets marked down to 25% off.
Next you conquer.
This is the part where you always will be able to maximize your profits! We call it taking progressive markdowns. You start your Semi-Annual Clearance Sale dividing things up into good, bad and ugly. You make a big banner with the right name. You decorate your front window. You market it. You train your staff.
I have this great tool called Killer Clearance Sale Secrets that gives you so many examples of ways to decorate your window and ways to advertise to make sure you’re really making the most of it. You really want to prep for this first day of your Killer Clearance Sale, because you want to make sure that your team is prepared and on board. In fact, in this tool I also have a checklist and an agenda for the team meeting to make sure that everyone is going in the same direction.
Notice that when I told you what the name of the sale was, I didn’t tell you the start and end date, because there’s not! You keep progressively marking down this inventory until it’s gone. So we start your Killer Clearance Sale where everything is 25%, 50% and 75% off.
Two weeks later we progressively take the next markdown. So everything that was 25% moves to 50% off. Everything that’s 50% off moves to 75% off. When you advertise, you say, “Our Semi-Annual Clearance Sale is continuing, up to 75% off. Most things are 50% off now.” Make sure you say that! You’ll have another rush, not anywhere near as the first day, but you’ll still have another big rush. Then wait two more weeks.
Four weeks from the day that your Semi-Annual Clearance Sale started, everything goes to its lowest markdown. Items that were 50% go to 75%; items that were 25% go to 50%. If it’s during the summer, you want it to coincide with your community’s sidewalk sale. This is when you advertise this is it, last call, these are the final markdowns.
The secret of this is that it continues to create focus and urgency about moving these items out. Twice a year for about 5 weeks, you’re going to be really hyper-focused about moving old inventory out of your store and prepping your pockets for that cash-flow nirvana.