How to stay afloat during the cost of living crisis!

Are you struggling to keep the cash flowing with the cost of living crisis hanging over your head?

You’re not alone.

Like you, many retailers are trying to figure out how to juggle rising expenses and slower sales.

But what if I told you....

✔️ There was a better way to negotiate with suppliers and manage your inventory

✔️ Create a budget that wasn't stretched to cover the essentials

✔️ Keep your shelves stocked without breaking the bank

With the right strategies, not only can keep your business afloat, you can also find opportunities for GROWTH!

Continue reading where I show you how to manage your cash flow more effectively!  

1. Budgeting. Create (and stick to) a well-structured budget!

👉🏼 Track your expenses: List all fixed and variable costs from rent, utilities, inventory and marketing and review them regularly

👉🏼 Prioritise essential spending: Focus your budget on essential operations that keep your business running smoothly.

👉🏼 Set aside reserves: An emergency cash reserve can act as a buffer during lean months, helping you to cover unexpected expenses without disrupting operations.

2. Forecasting. Accurate forecasting is vital for making informed decisions about spending, investing and borrowing.

☝🏼 Analyse past performance: Look at your financial history to identify patterns in revenue and expenses, in particular, seasonal fluctuations, which can have a significant impact on cash flow.

☝🏼 Monitor market trends: Stay informed about broader economic conditions that could affect your sales such as the current cost of living crisis. Consumers cutting back on discretionary spending will impact revenue. 

☝🏼 Regular updates: Cash flow forecasts should be revisited regularly, especially in uncertain times. Adjust your forecasts based on the latest data to ensure they reflect your current situation.

3. Negotiating. Negotiating favourable terms with suppliers and creditors can provide much-needed flexibility in managing cash flow, particularly when times are tough!!

👏🏼 Negotiate payment terms: If you're struggling to meet payment deadlines, don't hesitate to negotiate extended payment terms with any of your suppliers or relations.

👏🏼 Bulk purchasing discounts: If your cash flow allows, consider negotiating bulk purchasing discounts. This strategy can reduce your pre-unit cost, saving you money in the long run!

👏🏼 Review Contracts: Regularly review contracts with suppliers and service providers to ensure you're getting the best deal possible. If market conditions have changed, there might be room for negotiation.

👏🏼 Consider short term financing: Consider short-term financing options such as a business line of credit to bridge the gap during periods of low cash flow.  

4. Inventory. Manage inventory wisely. Overstocking ties up capital in unsold goods, while under-stocking can lead to missed sales opportunities! Striking the right balance is key!

👍🏼 'Just in time' approach: Order stock as close as possible to the time it's needed, reducing the amount of capital tied up in inventory.

👍🏼 Clear out dead stock: Regularly review slow moving items. Consider offering discounts or promotions to free up cash for more profitable items.

👍🏼 Leverage technology: Invest in software that tracks stock levels in real-time, helping you make data driven decisions about reordering and sales.

5. Customers. Don't overlook the importance of engaging with your customers! Loyal customers are more likely to support your business during tough times!!

🫶🏼 Personalised marketing: Tailor your marketing efforts to meet customers needs. Personalised offers and communication can boost sales and improve customer retention.

🫶🏼 Customer loyalty: Reward repeat customers with discounts, special offers or loyalty points to further incentivise purchases and provide a predictable revenue stream.

🫶🏼 Flexible payment options: Offer various payment options (cash, card, Amex etc.) and instalment plans to make it easier for customers to purchase from you during economic downturn.

Cash flow management is a critical skill - in hard times or not! The goal is not just to survive but to position your business for future growth.

With the right strategies discussed in this weeks feature article, you can navigate the challenges of today's economy and emerge stronger on the other side!!!

Whether you're new to retail or already trading, The Retail Academy is the ONLY online business community for homewares and lifestyle retailers who want a proven roadmap to grow their business!!