Is a shortage of cash holding you back from doing what it takes to grow your business?
The money invested in leasehold improvements, furniture and fixtures is gone. Only your merchandise and your ability to turn it over will keep your cash flow positive.
Every time you sell an item, a portion goes to pay the manufacturer, some must go toward overhead, and, hopefully, some to profit. Of course, this only happens when items are sold at full price. If marked down, depending on the amount of the markdown, profit and overhead contribution may be lost. Without profit, there is no reason to be in business. Without the contribution to overhead, continuing may not be an option.
To attract more customers, you must promote. For most retailers, promotional dollars must come from excess inventory. This buried treasure contains your future success. The “map” to the treasure is “open-to-buy” planning. Open-to-buy will enable any retailer to develop an inventory and buying plan based on anticipated sales and desired turnover rates. Upon setting up your open-to-buy plan, you will see where your inventory and future orders are out of balance. This information will help you develop a sales and promotional plan to bring yourself into line. These excess dollars will NOT go back into inventory, but will become available for promotion, staffing, better displays, etc.
Unlike buried treasure, excess inventory does not increase in value. To the contrary, it is depreciating from the moment it arrives in your store. This is another important reason for having open-to-buy. Keeping your inventory fresh and turning is the key to successful retailing. Only open-to-buy planning will insure that you buy the right quantities and keep your inventories lean, balanced and providing you with the funds to constantly promote and increase your customer base and your sales. With open-to-buy you will build a treasure in your bank account, not buried in inventory.
