Get your business ready for the post coronavirus world
Retail expert, Catherine Erdly tells businesses what they should be doing to get ship-shape for a post coronavirus future…
Do you feel like you’re always on the back foot? Swimming against the tide It’s very common for business product owners to feel this – no sooner than money comes in from sales, the same money goes straight out of the door to cover costs for stock or other expenses.This is a very frustrating situation for product business owners and it is one that can hit even more experienced business owners who have been operating for several years.
In fact, start their businesses feel like they’re on the treadmill and never really stop feeling that way.Why does this happen?
Quite often creative business owners are given general business advice or advice aimed at service businesses when they first start out. This is problematic – product businesses for example – have a unique cost structure – service businesses have a bigger profit margin as they’re not paying for stock. Up to 50% of your revenue is going straight on stock!
If the advice you’re receiving is not acknowledging that your stock is a big component of your cost structure then you’re going to run into problems.
Start with a plan
Planning, planning, planing, I really advocate sales planning, not least because the process of mapping out the amount of money you believe will be coming into a business each week or each month will help you understand how much money you can realistically expect to be coming in.
Map that against your outgoings, then you can create an accurate or a realistic view of your cash flow – if you don’t then the feeling of swimming against the tide begins.
If you’re not linking the amount of stock you should be buying to the amount of projected sales then you may well be purchasing too much stock – which is already a huge part of your outgoings as a product business owner. So you are on the back foot – literally.
Catherine Erdly has over 19 years experience working with product businesses of all sizes from high street names (such as Paperchase, Laura Ashley and Coast), all the way down to brand new businesses with just a handful of customers.