Help Needed ASAP Please!!!!

sammy115

Good luck with the business mentoring tomorrow. I really think a good cashflow forecast would help. If you need some help pm me.

fc123

Hi will post more tomo (bit late now) but we have run retail businesses for 20 yrs (always fully liable partnerships) and i will post some tips (things i wish we'd known when we started out!).
The big difference is that whilst one can estimate turnover / costs coming up, a wet Saturday, problem with town traffic etc can cause the sums to go wrong and so, cause havoc with day to day cashflow. just another note, we, in retail, are heading for a bad season, so getting things straight now will help suvive the DEAD ZONE of Jan to March.......our town is famous for indie retailers yet we see new busineses open, create a demand and a decent turnover, and then close down all the time.generally due to their fixed costs and the debts from the start-up being too high for the turnover coming in.

First rule in retail; turnover should be 10 X rent then the sums generally work....ie; working on a mark-up of X 2.7...you should expect to make 15% of gross turnover as profit / salary.will post tomo if you want any more tips on the card debt, managing suppliers / stock etc

OberonSH

I also be expecting the interest on your increased deposit back as well! I'm pretty shocked that the landlord has done that to you. Is there any way of finding a cheaper unit in a similar area?

Kiernan809

Sounds like the main priority should be how much your OD and CC are at in relation to their limits as they're costing you £10k a year in charges. You simply HAVE to get them within their limits to stop yourself sliding in the wrong direction. Quickly.

ksha

OberonSH wrote: »

I also be expecting the interest on your increased deposit back as well! I'm pretty shocked that the landlord has done that to you. Is there any way of finding a cheaper unit in a similar area?

Unfortunately we are in one of the best units in the town which has helped in our success. If i left now, I would lose it anyway!
K

ksha

fc123 wrote: »

Hi will post more tomo (bit late now) but we have run retail businesses for 20 yrs (always fully liable partnerships) and i will post some tips (things i wish we'd known when we started out!).
The big difference is that whilst one can estimate turnover / costs coming up, a wet Saturday, problem with town traffic etc can cause the sums to go wrong and so, cause havoc with day to day cashflow. just another note, we, in retail, are heading for a bad season, so getting things straight now will help suvive the DEAD ZONE of Jan to March.......our town is famous for indie retailers yet we see new busineses open, create a demand and a decent turnover, and then close down all the time.generally due to their fixed costs and the debts from the start-up being too high for the turnover coming in.

First rule in retail; turnover should be 10 X rent then the sums generally work....ie; working on a mark-up of X 2.7...you should expect to make 15% of gross turnover as profit / salary.will post tomo if you want any more tips on the card debt, managing suppliers / stock etc

Any tips would be gratefully recieved! All who i talked to at the beggining of my business appeared to have retail knowledge but it was later revealed that they knew very little!
Thankyou very much!
K

ksha

Thankyou for your positivity, JCD_Capulet! It makes a nice change to hear some supposrtive words!
K

ksha

Hello All, thought i'd update you on the mentoring session - the guy was with me for 2 hours and we identified that i need a great business plan and i'll be good to go. He's looked at things and it appears that i'm not doing anything wrong - its taken a huge load off my mind let me tell you!
Now the next hurdle is the rent which is out on tues - going to ring nasty landlord tommorrow to see if i can sweet talk him - wish me luck!
Thanks for all your help so far
K

fc123

Hi ASHA...just caught up.......your priority (obviously!)is to sort out the next quarters rent....
Your landlord rented a prime unit to a "novice retailer" (i'm not being rude just factual) which means there were no subways, costas etc after said unit...it is in his interest that you survive (he just wants his invst return on the unit )....I would suggest that you request to pay next quarters rent over ONE month (oct)...i know it will be a killer but you HAVE to be in a cash positive position BY Jan....all retailers i know run at a loss through jan / feb but survive using the surplus from oct/dec qtr.

you will then pay another quarter on 26th Dec....the Hardest QUARTER OF THE YEAR TO PAY IS march 27.You need to get strong now as your problems could be worse in Mch 08.

1st i'll outline things to address turnover;

Sellthroughs ; by now you have an idea of what is popular in your store.....DEAD / SLOW LINES; be ruthless....if an item isn't moving (3 weeks is enough time to tell)...mark it down...turn it back into cash and use the space for a line that sells...we recommend reducing goods "in situ" (merchanisd nicely) not chucked in a corner at the back all higgledy, piggledy. If a line is DEAD...kill it..remove from store (this cost will go into your "write offs" at end of year..aim for MAX 8% total stock budget as write offs) flog off (yes, at a loss) on ebay NOT using your trading name...you don't want to tarnish it)

HOWEVR....A POPULAR LINE ....if there is a little bit leftover (your sell through was say, 90% at full price.....put into write off...the temptation to mark down leftovers is overwhelming BUT the regular who paid full price could get the hump...so next time...waits for the markdowns. (we don't have full on sales anymore just in Jan for 7 days and, after 20 years, this new strategy has SO paid off...should have done it years\ ago)

You want to aim for 70% stock sold at FULL MARGIN, 22% at 50% off and 8% write off.

The KEY to your survival is MARGIN....(we are ladieswear but principles are the same) did you know most of the HIGH st clothing stores are working on mark ups in EXCESS of X 4 or 5 at the moment? Some are X 12 ex factory price...then they have distribution costs on top. thats how they they can afford the high rents out there oh! + the staff are all on 4 hour contract, min wage.

I would suggest that you look at all your product lines and assess their worth to your store..in terms of Mark up, uniqueness, best sellers....Your minimum mark up should be X2.7 wherever poss unless fast sellling.

Shoplifting; don't let them get a chance...keep tabs on your stock...watch out for the friendly regular who likes a chat...it is often the ones you least expect.

Spurious\ returns...never offer xchange on jewellery...some folks will use your shop like a library......if you want more info on this pls ask...i will post.

Do you do those cute kids tees etc?? expand on kiddy clothing gifts (targeting grandmas with savings to spend) and NO VAT...reduces the\ dreaded vat bill.

SALE OR RETURN.....if you get niche suppliers...insist on 1st order SOR... just a small ammount to try out before committing to an order....in the current climate most will agree if a small business themselves. this means that any errors / bad buys (we all do it but one has to try new things) can just be returned...not sit there and stare at you and remind you of their cost that can't be recouped........

I have made a guess at your business SOA based on your average turnover;
is your rent £20,000pa?? guessing from the rent deposit ammount.

please add to the gaps if you wish
Done as AVERAGE over 50 weeks
£2000 gross t/o
OUT
VAT; £180 (est after ofsetting exps)
stock; £1000 (always work out weekly average) assumes 65% sellthrough.
Rubbish;
carriers;
'phone talking;
'phone PDQ
insurance;
Staff;
PDQ rental
Card commission;
Alarm?;
RENT;
RATES;
Stationary;
Tax on any profits;
other;

whats left is debt repayment THEN wages for you.

I feel that this is going to be tight...it is really important to think in "the net NOT "the gross"; that is...not i take £2000 pwk...BUT i make, say, £200pwk after all my costs.



sorry this is going on a bit....................

PRIORITISE; business rates...they are vital...never miss a monthly payment or the council WILL send in a bailiff if you then make an arrangment and fall back on it (i speak from experience here) they also shut down more shops than landlords.
LANDLORD; he may take monthly payments which is better for cashflow (but not in Jan / Feb)
Card commission; you don't want to lose the facility.

Suppliers; those that supply your bestsellers...keep up with their account as you can then re-order quickly.

DONT HATE The customers!! on a quiet day with a pile of urgent bills stuffed under the counter...the temptation to scream when someone comes in, messes everything up, pretends to want to buy (but really just wants a little chat with the friendly shopkeeper) and leaves, is overwhelming!! i still have to remind myself not to take things out on the innocent, bored mum with the buggy who is just having a wander around the shops......


THE DEBT; card...get it onto a 0% ASAP if your credit rating is good...if not keep 'phoning them, write them an SOA (PERSONAL) and you WILL eventually get a 6 month interest free deal...we have done it with 3 cards..allocate a reasonable ammount and don't use it again.

Your overdraft is a millstone....um....i would suggest that you will need to use it up to the max again to get through jan/feb so if your T/O is up on the average (remember though your stock costs move up and down with your turnover as you have to repelnish stock sold to maintain sales) through oct + dec (nov is usually rubbish) get it down as much as poss but keep the facility if you can.

Parents; do you pay a regular ammount back at the mo??

An just an add-on...we lost a rent review 4 yrs ago and our rent doubled overnight (yet our turnover, obviously, didn't)...anything i write is my view and from my own experince plus what has worked for us.


Ay more Qs...please post

fc123

Conrad is on this thread! please Conrad tell us what you do and the secret of financial whizzkiddery.