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.
Then, and this is the powerful part, consider what else you might do.
BTW, expect to be doing this many times, even sometimes in the middle of the night.
Go for it! It is all healthy. These totally volatile times cause a lot of opinions and fears to be swirling around. Showing "what if...?" can be very helpful.
Ready? You need to make only a few entries. Here's how to get started on your first draft.
THE PROFITS TAB
Set June or later as the first month of your plan on the Profits tab.
Then, enter expected sales and margins for each month. Grim, we know, especially the first few months.
Then, make the entries for Expenses.
Here, you will enter each number just once, versus month by month. If you need some help on the "expense buckets", review the User's Guides here.
See projected P&L for the year.
Scroll down to take a quick look at the P&L for the year. But don't linger (or freak out too much with the loss it shows.) Keep moving!
THE INVENTORY TAB
See Buying Plan
Scroll down to check out the Inventory Buying plan. Likely it will show you as being overbought; no surprise there.
THE CASH TAB
Okay, on to the third tab: Cash.
Now, this IS the page to linger on. Scroll down to see the Ending Cash Balance for each month.
NOW IS WHEN YOU START TO PLAY "WHAT IF...?"
That is, "How would cash flow be affected by changes I might make?"
What else can we do to improve our cash flow?
When you see a plan that shows some promise, date it and print it out.
AND THEN, WHENEVER YOUR ASSUMPTIONS START TO CHANGE, DO ANOTHER PLAN.
There IS a lot you can do besides worry!
And thanks to the remarkable 3-in-1 Cash Flow Calculator, you immediately can see the impacts of any of your possible decisions, before any salaries have been cut or merchandise orders cancelled (or placed.)
These are difficult times for us all. Retailing in particular is under enormous stress. Many feel like there are no good choices.
But, there are good decisions. And The ROI is dedicated to helping you be able to make those good decisions for yourself.
The Retail Owners Institute® has developed a retail strategy for "Inventory Management Going Forward."
As we often do, it was recapped as an unassuming chart (see above) identifying the Five Stages of Merchandise Mix Management, from "Before COVID-19" to the "New Normal?"
Here we are, in the first week of December, in this tumultuous pandemic year of 2020.
Maybe more than ever, you need to have a grip on your cash flow! What will you cash flow look like during December, January and February?
Since you must be able to make informed decisions about your business, every day, an up-to-date cash flow calculation is essential. Remember, profits are interesting, but it's cash flow that's significant!
Cash flow doesn't have to be fancy. In fact, what most owners need is just to have the basics on the back of an envelope. The savvy ones always have that with them.
Each of us, our households, businesses and communities are in different stages of shutdown due to the coronavirus.
While we cannot speak to when this will end, we do have some ideas for dealing with the "fog of uncertainty" that hangs over us all.
If 2020 was the year of pandemic disruption and scramble-to-survive mode for retailers, 2021 may be the year of relentless Retail Is Detail reminders.
Many of you may well have benefitted from one or more rounds of PPP loans and their potential "forgiveness." Now comes the reminders that you must seek forgiveness. In writing. From the bank that loaned you the funds. And there are some time deadlines involved. Yikes.
Oh, and total forgiveness may not be forthcoming. It depends. (See below for these guides* and disclaimers from the SBA.)
Then there are the so-called "bookkeeping details" surrounding all this.
Let's assume your stores have been closed for weeks now.
We recognize how conscientious you are. So, after paying what you can to your employees (and yourself), the next most-worrisome dilemma is your rent.
As you likely have discovered, a common choice for many landlords is to offer to defer your payments. But that means taking on more debt, as those payments are only being postponed to a later point in time.
You need a better solution than that.
We often caution that many vendors are so much better trained at selling than retailers are trained at buying. In their eagerness to grow sales, and the associated promise of thereby growing profits, it is all too easy for retailers to become overbought. Instead of higher profits, they can find themselves in a cash flow crunch.
And that was in Before Times, before the pandemics. Throughout 2020 and continuing now, vendors and retailers alike have increased their online capabilities. Ordering online brought new challenges to buyers and sales reps, but also saved time and improved access.
We have applauded these advances in technology, but...
Still less than $1 a day! 👀