Is your inventory building up? Do you have too many invoices and not enough cash? Are you behind in the rent? Have you cut back on personnel?
Retailers have two types of expenses: merchandise and overhead. Overhead – rent, labor, utilities, etc – must be paid or you cannot operate. Merchandise is a different story. Of course, vendors want to be paid, but retailers will delay payments because they’re cash flow is down. This is never temporary since they continue to buy without proper planning. They overbuy and when sales (even good sales) don’t provide enough income, they delay payments, take markdowns, go to the bank or invest additional cash.
All of these are bad alternatives and create an environment of panic. This is the last thing a retailer needs as they should be dealing in a positive way with promotions, sales staff, customers and vendors.
There’s an easy remedy for these problems and the sooner you get underway, the better. The remedy is open to buy planning. It’s the one merchandising tool that will clearly show where your current inventory and future orders are out of balance based on YOUR anticipated sales and YOUR desired turn rates. Meeting your sales is important, turning your inventory is key to being profitable.
Don’t wait until you’re in trouble (unless you are already) to set up open to buy planning. It’s not that difficult with the right system and the results will keep your store OPEN for as long as you so desire.