Small seasonal retailers can earn half or more of total annual sales between May and September. Consequently, the business choices made during these critical months can affect cash flow for the entire year.
The U.S. Small Business Administration has compiled a list of six hurdles small retailers face during the busy summer months:
Lack of inventory control. Inventory control is crucial for small retailers, especially during the busy summer sales months. It’s important to remember inventory equals profit. Knowing how much product to order, when to order it and what items to order can make the difference between having cash in the bank or aging inventory on the shelves.
Hiring the wrong employees for critical positions. There’s a cost to hiring the wrong people for key positions. Small firms tend to have fewer layers of management between owners employees. New hires must be able to perform with less direct supervision and motivated to get the job done right the first time. Avoid this issue by writing a detailed job description and training new employees on how you want them to represent your business.
Undercapitalization is a problem no business wants. Cash flow constitutes the life blood of all small businesses. Cash flow allows a business to make payroll, pay suppliers and keep its doors open. Business owners can immediately increase cash flow by collecting accounts receivables in a timely manner, not keeping too much cash tied up in unnecessary inventory and eliminating unprofitable account relationships.
Not embracing online sales and social media. Recent Census Bureau reports show that more than $294 billion in e-commerce sales were made nationally in 2014. A Forrester Research study shows that by 2018, e-commerce sales will reach nearly $414 billion. In the near future, nearly 60 percent of all U.S. retail sales will involve the Internet. As more consumers make purchases using the Internet, it’s imperative small retailers develop a retail Web presence. Leverage Twitter and Facebook to promote one-day sales or plug special product lines and high inventoried merchandise.
Not delaying the employee office party and social events. It’s sales crunch time from May to September. Office parties can cause distractions at a time when the business needs to be especially productive. Too much food and drink can not only cause a nasty hangover, but also sidetrack employee and management focus. Consider moving the company barbecue until after September and call it the annual end-of-season thank you event.
Innovation and creativity lost. Historically, locally owned small retailers beat their big box competitors by providing outstanding individualized customer service. The many summer holidays have pushed large retailers into flooding the market with lost leader pricing on a wide array of seasonal products. Small retailers can take the offensive by selling creative and innovative products that can’t be found elsewhere. Create a unique customer experience that entices shoppers to travel outside their comfort zones and discover out-of-the-ordinary shopping districts.
For more information on ways the SBA can assist your small business this summer season, call the Colorado District Office at (303) 844-2607 or visit the Web site at www.sba.gov.