How to manage your money so you can make more

As a business owner, managing your cash flow is one of your most important jobs. As a retailer, it is particularly critical as it goes hand in hand with managing a flow of goods that you hope to sell before you pay for it. Many of us who have been in the retail business for a long time have seen the ebb and flow of the economy over the years and how it has had a direct correlation to our bank accounts. We’ve seen our cash reserves fluctuate, and in turn, the amount of attention we give to what’s coming in and going out may become more or less focused. We know how important this function of our job is. The real question is how can you most efficiently manage your cash flow? Like I find most things in life, a detailed analysis and continued awareness will directly result in better preparedness and coming out on top. While my wife may find this trait annoying when it comes to planning a vacation, in business it is what separates those who are more profitable from those who just get by. So, what specific tasks do we need to accomplish to manage this process and plan effectively? Step 1: Create a purchasing budget. We know we can roughly prepare a budget by looking at past performance. However, how do we break that budget down? We must look at a ‘Sales Analysis’ by Vendor, by Class, and by Store if managing multiple locations. RICS Software makes these reports easily available to you and contains particularly important metrics like ‘ROI’ and ‘Inventory Turn.’ Step 2: Plan the flow of those goods according to when we’ll need them and when we’ll want to pay for them. That requires more analysis of what sells when and what you have on order. Since most of us receive discounts for placing future orders, we are planning delivery of goods 6-12 months in advance. Step 3: Balance the deliveries so you don’t get stuck with a ton of bills due at once. Running an ‘Open Purchase Order Report by Month’ in RICS will keep you keenly aware of how much you have on order for each month. It can also be set to reflect what you have due for payment each month based on information you enter. This can be dissected by Vendor or Class and will help you balance the flow of goods and keep you keenly aware of how much you will be spending on vendor invoices each month. Face it, most of us have been the bookkeeper, head marketer, primary buyer, number one salesperson, and chief janitor in our stores, all at the same time. Utilizing the best tools for achieving more efficiency in these roles is the only way to survive. It’s stressful and it’s not easy. Yet it can be, and is done by thousands of retailers everyday who are using RICS to be more profitable. Click here to learn how.