Aren’t you sick of hearing all these financial pundits talking about what they think will happen in the beginning of 2023? Some say inflation, some say recession. Some say market adjustment, some say back to normal. They all like to point to a graph or two as support for their argument, but in the end, they don’t really know, and I don’t know that this affects us in our day to day lives as independent retailers.
As for me, I have been working with independent retailers like you for more than 30 years. And here’s what I’ve noticed.
There is one thing, and one thing ONLY that drives cash into your business. Look at this chart:
Let me walk you through this. If you have a store doing $1 million in sales, and you are turning your inventory 2.5 times per year, you’re doing OK. But if you could improve those turns by just a half turn, you’d put $41,000 in your pocket. Why? Because it would be money in the bank, not on your sales floor/stock room.
And, if you could improve it a full turn, you’d put $69,000 in your pocket.
Either of those would pay for lots of stuff: additional staff, remodeling the store, more aggressive marketing programs to grow sales, etc.
All the other stuff that people talk about, such as e-commerce, social media, loyalty programs, etc., are great things, but YOU PAY FOR THEM BY INCREASING YOUR TURNS. Do you see that?
But how do you do it? How do you get faster turns? First of all, you have to know how to measure turns properly in your business. Peter Drucker once said that you cannot improve what you cannot measure. Are you measuring your turns? Does your POS help you do that? If not, reach out to me and I’ll help you with the math, for free.
And the second, most important step, is planning your sales and your purchases/inventory to achieve those faster turns. You can’t just say, “I’m going to turn faster, I’m going to buy better,” you have to have a plan that enables you to see the numbers, take action, and measure the results.
I thought I understood this when I was in the point of sale business. I had a hint of it, but didn’t really get it until I started working in planning with guys like you. When I saw how powerful it was, the light went on, and my life (and my clients’ lives) changed forever.
Let me know if you want to know more. And we are currently running a special where you can get your first month of planning absolutely free!