1. Cash Flow Hiccups: A tight cash situation can cause your business to struggle. Your inventory runs low, you skip payments thus accumulating debt, and you certainly can’t reward yourself for all your hard work. Most importantly, you can’t afford to invest in new merchandise and keep your stock up-to-date with the latest trends, which in turn leads to lost sales opportunities.
The Cure: If you want to turn your business around, every penny spent should be accounted for. A thorough assessment of your business financials will help you get a clear view of your current situation. Make a list of your monthly operating costs and look for items you can leverage. For example, you could re-negotiate old debt payments, ask for a rent reduction, or get some of your employees to work part-time. Eliminate all unnecessary expenses, or try to keep them at a bare minimum.
2. Suppliers’ Pain: If you’re buying from a single supplier, you may find it hard to negotiate better terms because your business’s day-to-day survival relies on a sole provider. On the other hand, if you’re using multiple suppliers, you may have trouble managing payments while losing the benefits and discounts that large purchases grant you. How can you make the best of both worlds?
The Cure: Renegotiate your contract with your supplier to see if you can achieve better terms. If that’s not possible, you can shop around to decide whether you’d be better off taking your business elsewhere. Ideally, you should stick to one or two main suppliers, while also looking out for promotional offers and special deals from independent sources.
3. The Impulse Buy Syndrome: When a sales rep pitches his brand new, limited-time offer, you instantly jump on board. The price feels right, your profit margin becomes better, and you may even sell the products at a discount to attract more customers. That sounds like a great deal, doesn’t it?
The Cure: When it comes to wholesale purchases, there are more important factors to consider that the price you’re paying. The main volume of your inventory should consist of products with a short sell-out time, which is the amount of time it will take you to sell the entire quantity of a product. Therefore, before placing an order, you should examine whether the product is in season, how attractive or necessary it is for your customers, and how well the specific product category sells in your store. Running ad campaigns and media coverage also help a product sell faster.
4. The Best-Sellers Amnesia: It’s hard to manage your inventory if you can’t recognize the items that bring in the cash. In other words, you need to know not only how many units you sell per code, but also the amount of money they earn you over a given period of time. These sales figures will also help you identify the products you need to discontinue or put on sale.
The Cure: You need a reliable inventory management system, and plain excel sheets won’t cut it. Inventory software will allow you to instantly check your current stock, and collect and view valuable sales stats. You may even create promotional offers and coupons for slow-moving codes, or set up automatic re-orders for your best-selling items. This way, the process is simplified and your business is always well-stocked.
5. The Discount Plague: Big box retailers and chain stores sell lower than you because they can afford to. By buying massive amounts of products, they score better deals that allow them a more flexible pricing strategy. Given that you lack this kind of flexibility, an aggressive discount strategy will have a devastating impact on your bottom line.
The Cure: Forget about the price war. There are numerous ways to add value to your products while maintaining high price points. Boost your competitiveness by providing stellar customer care and make sure you keep up with the latest trends in your field. You can also attract more customers by offering personalized services and rewards to your loyal clientele. After all, you don’t want people to come to you because you’re the cheapest; you want them to choose you because you’re the best option on the market.
The first step to reviving a business is identifying harmful habits and behaviors, and correcting them. From then on, all you need is a solid plan and lots of determination. As long as you’re willing to put in the hard work and long hours it requires, you can turn your struggling business into a success story.