HAVE YOU MADE PLANS FOR THE NEW YEAR?
You wouldn't go on a driving trip without having some kind of plan on where you want to end up and how you are going to get there. You wouldn't drive down the highway with your eyes closed. However, I see it all the time that retailers do not make any plans for how they are going to achieve their profit goals. Not only that, too many do not even have any profit goals! They just go on from day to day and year to year "hoping" they will make a profit, be able to pay their bills and remain in business.
There is a better way and it does not have to take too much time. Prepare a proper retail plan so you can define what it is you want and how you are going to achieve it. The first time you prepare a proper plan, it will take some extra time. But once you get through the first one, the plans in subsequent years will be much easier and faster.
What is a PROPER retail plan?
After this has been completed we are ready to plan the store's Operating Expenses. Operating Expenses are relatively easy as we can look at what happened last year and make adjustments for future anticipated changes. For example, we may plan to add a web site so would need to add the monthly costs associated with that. Or, we may have received notice from our electric company that rates are increasing by 15% so would need to adjust that expense upward. Or, due to continuing increases in health insurance premiums we may have found a new carrier and our expense will be reduced.
Unless the store is operating without any debt (which is rare), there will be interest expense which must be calculated. Also, a store can show a profit and still have cash flow problems. Therefore, once the budget has been set up the next step is to prepare a Cash Flow Projection so you will know if there will be any cash crunches in the future that need to be taken care of, either by arranging some dating with your vendors or a short term bank loan. The Cash Flow Projection will tell you when you will need the extra funds and when you will be able to pay them back. Take this to show your banker and you will be much more likely to receive the short-term loan you need.
In summary, a good retail plan includes:
It will take little time, especially the first time it is done, but it is well worth the effort and can mean the difference between survival and a GOB (Going out of business sale). For those who would like some help with this project, I provide this service at a flat rate of just $1,500.
FINAL IMPORTANT STEP
Remember that a goal without a written plan is just a fleeting thought.