In today's financial climate, how in the world can independent retailers (that's the 92% that are not publicly traded) get financing? In most cases banks are not lending (even as they run ads proclaiming their "support for small businesses.") Landlords aren't more lenient, nor are many vendors. Even mothers-in-law are asking tougher questions! So, what should a retail owner do? Just give up on the idea of getting financing? Or, worse, accept the cash offers from vendors, payment processors, or POS providers who take their "payments" right off the top of your daily sales? Well, it is maddening, but The ROI recommends an easy exercise that may be of great help.
Remember, especially today, there is essentially no such thing as a bank loan to a privately-owned retail business as an entity of its own.
And further, the personal financial statement and guarantee of the owner(s) must be supplied along with all the standard information - and financial statements - for the business. So, start by going to the Retail Benchmarks on The ROI site, and check out the Benchmark ratios for your retail segment. (The banker will be quick to do this, btw.) Then, as you prepare your loan application (or are "reporting" to your current lender), here is our suggestion:
That's right. Do the banker's work for them! And level the playing field! Here's an example:
A totally improved picture!
This is an easy way for you to analyze for yourself the financial implications of the loan you are requesting, and to "do justice" to the financial strength of your loan request. Remember, banks put the Balance Sheets together anyway. We're just suggesting that you do it for them. Banks still want to loan money; that's how they make money! By having the perspective of the Benchmark numbers for your particular segment, you are better able to show the banker that lending to you is a safe, defensible decision for them.
For more information, see Banks4Retailers.com.
As the Holiday Season approaches, finding good help promises to be especially challenging for retailers this year. Then, we read "10 Things to Know to Get And Keep Retail Jobs," a to-the-point commentary from Bob Phibbs*, who specializes in retail sales training. Here are his Top Ten recommendations for prospective retail employees:
What a scenario. Shoppers buying vigorously, retailers joyously raising sales expectations, and many more anxious lenders offering "cash in 24 hours!" to business owners. Wow! Are these the good times, or what? Forgive us, but today we're focusing on the "or what?" aspect.
YOUR GOAL: QUICKLY GET TO A FIRST DRAFT. Face it. Sales are dropping. By how much? For how long? Nobody knows for sure. But, you can make some assumptions, some educated guesses. Put those into the 3-in-1 Cash Flow Calculator.
These totally volatile times cause a lot of opinions and fears to be swirling around. Seeing "what if...?" can be very helpful. All in just minutes. On your own.
People don't go into retailing to be financiers.
But few are attracted to the financial part. Which is exactly why The Retail Owners Institute website has been built! Given our years of experience consulting with retailers, especially in turnaround situations, our speaking at conferences and publishing in trade publications, we wanted to "level the playing field" for retailers.
Isn't it great? Headlines and the media world seem to be in unison; the dastardly COVID pandemic is being arrested. And, if we can believe the pundits, pent-up shoppers are about to buy all sorts of products and services with abandon. But, will they? Given this exuberance, many retailers could be building up excess inventory. Retailers once again need to be true merchants. That is, the #1 responsibility of retail senior managements must always be to control inventory. (It's the only thing that makes money, but it soaks up cash.)
As we emerge from the pandemics, many retailers are eager to grow. (How's that for an understatement?!)
Trade shows are opening up with great success and eager buyers. Landlords are eager to fill vacancies, and in many instances, to cut deals. Vendors are eager to quit thinking about supply chain problems and start selling their merchandise, especially at trade shows. Plus, the continued growth and expansion of online wholesale marketplaces makes far more product available to retailers. Then there is the access to capital. Lots of money is floating around out there All in all, it creates an environment of exuberance. "Seize the opportunity" is the rallying cry. Indeed, for some retailers, FOMO – that Fear Of Missing Out – is pushing them to make some major decisions.
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