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Our Version of the 1%

Lately everyone has been talking about the 1%. In politics that might be the ultra-rich. You either are them, hate them, or on your way to becoming them.

In retail the 1% I want to talk about is your unsaleable merchandise.

We ended our closing with only 1% of our inventory remaining. Yeah, pretty good when you consider during our closing we sold 17% of our merchandise at full price, most of the rest at 20% off, and only went to 40% off those last few days when the inventory got below 10%.

Here are two lessons you can take from this.

NO BUYER IS PERFECT

No matter how well you think you have your finger on the pulse of your customers, you will make some buying mistakes. That’s a freeing thought. You know you won’t be perfect so don’t try to  be perfect. Take a few risks. Try some new things. Some will work, some will not. 1% you won’t be able to give away. That’s not the end of the world.

You might have jumped in on a fad too late (or even too early). You might have gotten seriously undercut by a rogue retailer online or a vendor dumping the remaining stock through a discounter. You might have simply liked a product more than your customers did. It happens to even the best buyers. There will always be inventory that just won’t move at regular price, and there will be inventory that just won’t move at all.  In fact, make it a game every year to figure out what your 1% will be. Have your staff vote right before the busy season on what they think are the flops. Offer a gas card or local restaurant gift card to the winner.

DON’T SIT ON OLD INVENTORY

Knowing you will make mistakes, you have to have a system in place to recognize the slow movers early on so that you can get them moving out the door. The game is actually a fun way to engage your staff as they will be checking to see if their choice is “winning”. One interesting effect of this is that your staff, by paying attention to those perceived flops, will actually help you sell that merchandise.

Your point of sale system is your best set of eyes. Any POS system worth the money you spent will at the very least tell you what items are old and not moving. Be cold and ruthless with that inventory. Don’t invest any emotion. The sooner you recognize bad merchandise, the sooner you can turn it into cash and move on.

When you have to sell off everything you own like I just did, you see the stark reality of your buying decisions. Fortunately, since we had a process for recognizing bad merchandise and moving it out each and every year, we weren’t stuck with a lot of product at the end of our day – only 1%. I can live with that.

-Phil Wrzesinski
www.PhilsForum.com

PS Remember all those free displays your vendors gave you that you’re no longer using? You can sell those, too, and make up the money you lost on your 1%. In fact, a fixture/display sale is a good combination to have when you’re moving out the mistakes. It takes some of the sting away (and gives you back some room in your warehouse). Manage your inventory and cash flow and you could be part of that group on their way to becoming a 1%er.

In Retail it is All About Location

Let’s get the elephant out of the room right away.

How can I write a blog about being a successful retailer when I closed my retail store? I can sum that up in three words…

Location. Location. Location.

Yes, we were having a tough time with cash flow. That’s the usual culprit behind any store closing. Much of that was due to our location.

Location Issue #1

The population of Jackson has been stagnant at best the last several years. The youth population, however, has shrunk considerably over the last several years as birth rates declined for all groups but teens, and school enrollment is down huge since 2007. On top of that, average household income in the city fell from around $35K per household to $27K per household (well below the national average of around $56K).

I have constantly talked about paying attention to your Market Share. To know your Market Share you first have to know your Market. Our market has shrunk over 40% since 2007. Fortunately, our Share of that market had stayed the same. We still had our piece of the pie, but our pie had turned into a tart.

Location Issue #2

We own and occupy a large building on the north edge of downtown. We have been a large toy store for decades, carrying toys, hobbies, baby products, sporting goods, scouts, and more. When the market could bear it, we had a ton of inventory, but scaling back inventory to match the needs of the community meant less efficient use of space and less of the “impact” of being that large store that had everything.

We discussed converting to a smaller store, more in alignment with the population and income, but that would have led to many long-time customers lamenting that we just weren’t the store we used to be or the store they remembered. Better to close while the memories were still positive.

Location Issue #3

I am a big believer in downtowns. Call me naive but I still believe downtown shopping districts can be successful. It takes dedication from the shop keepers, the landlords, and the city leaders to make it work. It takes smart policies, united fronts, and strong relationships to make it work. We have some of that in Jackson, especially among the retail owners. We also have a city council dedicated to improving the streets and sidewalks and green spaces in our downtown. Unfortunately, that also means a ton of disruptive construction. Two years of it! (and counting.)

Our city leaders are not retailers and don’t understand how construction affects retail. They saw an opportunity to get roads fixed and attract new development (all good things), but didn’t see the consequences to the existing retailers and restaurants. When you are trying to dig out of a cash flow hole, having the busiest street in town—the one that goes right by your building—be restricted from three lanes to one with backups that stretch for blocks for an entire spring and summer is not a good recipe for success. At one point we had so much construction downtown that one detour actually led you to another street closure dead-end, and only if you had local knowledge would you know which alley would get you back to open road.

In a couple years, our downtown is going to be new and fresh and repaved and ready for business. But the last two years were pretty tough on the businesses already here, especially for us as our market declined.

Yeah, Amazon is a deal-changer for many retail categories. Yeah, our own vendors are making decisions that hurt the indie retail channel. Yeah, customers are as fickle as ever and have power like never before. None of those are insurmountable. You can still compete. Even as we closed, we were holding our own for our market. We just didn’t like the direction our market was heading.

If your market is your problem, you can do one of four things, Move, Close, Change or Wait. We chose to close.

Now you know.

-Phil Wrzesinski
www.PhilsForum.com

PS I’ll discuss the other three options and what would make them attractive in future posts. Right now I have to go let the big elephant in the room out to roam the savanna.

My Big Fat Email Subject Line Mistake

Your subject line is the most important part of your email. Period.

Get it right and your email is a success. Get it wrong and nothing else matters. I learned that the hard way yesterday.

We’re doing a big promotion on Election Day. Something new. The subject line in my email read…

“Election Day ONLY – 20% Off all Gift Certificate Sales! See inside for details…”

The first two people I talked to about the promotion asked the same question. “Do we get 20% off the purchase of a gift certificate or 20% off purchases made with a gift certificate?”

I went back and read the content of the email. It clearly states that you get 20% off the purchase of a gift certificate. How did they get so confused? Then I read the subject line again. I saw the error of my ways. It wasn’t as clear and concise as it should have been. I left room for interpretation.

TWO LESSONS

First, before you send an email, understand that many people will only ever read the subject line. They get so much email that they scan subject lines and hit the delete button. Therefore your subject line has to get your point across clearly and quickly with no room for doubt. Clever and cutesie subject lines leave too much room for interpretation. There should be no doubt about the purpose of your email. There should be only one interpretation of your subject line.

The best way to make sure your subject line is tight and to the point is to ask for help. Ask someone outside of your bottle to read your subject line and tell you what it means to them. Try to ferret out all the possible meanings. Then rewrite it to eliminate any confusion or misinterpretation.

Second, if you can’t make your point in the subject line, perhaps because it is too nuanced or complicated, then make sure your subject line has enough enticement to make people want to open the email. According to MailChimp, the average open rate for email from retailers is about 22%. In other words, 8 out of 10 people likely won’t open your email. You have to give them a reason.

Make it clear. Make it concise. Make it work for the 8 out of 10 that don’t open emails. Make it legitimate and not sounding too spammy. Make your subject line get people to want to open your email.

-Phil Wrzesinski
www.PhilsForum.com

PS In case you’re wondering why I am doing a promotion like this for the store, here are the reasons…

  1. I get a huge influx of cash right when I need it most to help stock up for Christmas.
  2. Customers who redeem gift certificates often spend much more that what the gift certificate was worth.
  3. I get my customers to commit to shopping with me now before some shiny bauble from someone else catches their eye later.
  4. I get to promote Election Day as an important day.
  5. My Transactional Customers get a great deal!
  6. About 10% of all gift certificates go un-redeemed, so I’m really only giving away a small bit of margin.

You Don’t Make it Up in Volume

(Warning: this post contains math. Proceed with caution.)

“We lose a dollar on each one we sell, but we make it up in volume.”

Yeah, we all know that isn’t right, but there is a mistaken belief that if you lower your prices, you can easily make up the lower margins through higher volume.

Warehouse Melissa and Doug 2

Let me show you why that doesn’t necessarily work.

First, we have to make an assumption together. Your business has fixed costs that do not change as your sales change (utilities, rent, etc), and your business has variable costs that go up as you do more volume (credit card fees, payroll, freight, advertising, etc).

Agreed? Good.

DOING THE MATH

Here is some simple math…

You have an item you purchase for $10 and sell for $20. Let’s say you sold 24 of this item last year. That gives you a gross profit of $240 (24 units x $10 in profit per unit = $240 gross profit).

But you have the grand idea to lower the price 10% to $18, figuring you’ll make it up in volume.

 

To get the same $240 in gross profit, you now need to sell 30 units (30 x $8 = $240). That’s a 25% increase in units sold. With more units sold, however, your variable costs will go up. Maybe it is advertising because you had to spend more to get the word out about your lower price. Maybe it is extra sales people needed to help boost sales. Maybe it is more credit card transaction fees.

Realistically, just selling 25% more units won’t even break even because of the rise in variable costs. You’ll probably need closer to 30% more in units sold to cover your 10% discount.

Do you think 10% Off is enough to sell that many more units?

GOING LOWER

Okay, maybe 10% isn’t enough to move the needle. Let’s go 20% Off and sell them for $16!

Here’s the math…

40 units x $6 = $240.  Yes, you now need to sell 67% more units just to get the same gross profit! More than likely, as your variable costs go up, you’ll probably need to sell about 70-75% more units to truly break even.

How about 30% Off?

60 units x $4 = $240. If you go to 30% Off, you better be able to sell 250-300% more units to make it up in volume.

That is a lot of extra traffic you’re going to need to draw, and a lot of staff you’re going to need to handle those sales.

GOING HIGHER

When you do the math, making it up in volume isn’t the answer. But ask yourself this question…

If I raise my prices a little, how many sales might I lose?

A 10% price increase could handle a 17% drop in units sold and make you the same amount of gross profit.

See? Those math classes in high school can pay off!

-Phil Wrzesinski
www.PhilsForum.com

PS Yes, you can raise your prices. With the way insurance premiums, taxes, utilities and other expenses keep rising, you have to find ways to make more money just to stay in business. But just a straight increase across the board isn’t the strategy. Download my FREE eBook Pricing for Profit in the Free Resources section to see smart ways to raise your prices (that won’t cost you a single unit sold).

 

Changing Your Thinking on Coupons

I’m not a fan of coupons. There. I said it.

If you’ve downloaded my free eBook Main Street Marketing on a Shoestring Budget, you know I prefer giving away gift certificates with no strings attached – instead of coupons – to attract new customers.

I also fear that using coupons too much trains your customers to wait for the next coupon before they shop.

Lastly, I believe coupons are more geared toward the Transactional Customer than the Relational Customer (the latter whom should be your primary target in your advertising and marketing).

With all that said, coupons done right can be a valuable part of your tool box.

Retail Toolbox

DOING COUPONS THE RIGHT WAY

As I told you yesterday, the real key for coupons is to make them Rare and Special. Rare so that people jump on the deal when it happens and aren’t trained to wait for the next one to make their next purchase. Special so that the customer isn’t anticipating the next coupon and is more likely to act on the current one.

Rare and Special will increase your ROI because they will get more people to act on the current coupon. Your other big issue is delivery. How do you get those coupons into the right hands?

  • Newspaper Inserts – this is the preferred method of the big bog stores because they have the economy of scale for printing and delivering to get the best rates, and they don’t care who gets their coupons
  • Direct Mail – you can buy a list (and hope it is okay) or build your own. One takes money and has little return. One takes time but has a better return.
  • Postal Zip Codes – you can target zip codes instead of direct addresses for a little less per piece than direct mail
  • Email – easily the cheapest, easiest to share, but also most easily duplicated

Let’s look at that last one a little more closely…

KNOW YOUR GOAL

If your goal is to limit the coupon to “one per customer”, email can be tricky because it is easy for a customer to print out multiple copies and use them herself or give them to her friends. That’s the big question I always get about sending coupons via email. “But how will I track if a customer uses more than one?”

I always ask back, “Does it matter if a customer uses more than one?”

Your goal for any coupon should be to Drive Traffic and Increase Sales. That is what coupons do best. Where is the harm if a customer shares your coupon with others? Where is the harm if the customer makes multiple trips using multiple coupons? Don’t both of those Drive Traffic and Increase Sales?

If your goal is to Increase Profits, then a coupon isn’t your friend in the first place. Coupons won’t help your profit margin (I’ll show you the math later why “lower your price and make it up in volume” doesn’t really work), but they can increase your traffic and cash flow and give your sales staff the chance to increase average ticket sizes and items per transaction.

CHANGE YOUR THINKING

If you send out a coupon via email, you have to consider two things…

  1. It will be shared
  2. It will be printed/used multiple times

If your goal is to Drive Traffic and Increase Sales, sharing and printing multiple copies are both GOOD things. In fact you want to encourage that.

Encourage your email list peeps to share the coupon with as many people as they can. It increases your reach to people who might not yet know you and it gets your fans to promote your business for you. In fact, take it a step further and encourage social media sharing, too. Your goal should be to get the coupon to as many people as possible as cheaply as possible. That’s how to get the best ROI.

Encourage your email list peeps to use the coupon early and often, too. Every trip they make means another chance to deepen your relationship with them and turn them into fans. (If you sell a commodity item like food that people are buying weekly, simply put a tighter time limit on the coupon to keep the coupon Rare and Special). The reality is that you won’t get that many multiple trips. Unless your offer is incredibly compelling and you’re giving away half the store, the likelihood that a customer is going to shop your store twice in one week is fairly low to begin with.

Email is the cheapest way to deliver coupons. It also is one of the most powerful ways to get your fan base to help you reach more and more people. You just have to change your thinking from one of scarcity (“limit one per…”) to generosity (“use it early and often and share it with the world…”).

-Phil Wrzesinski
www.PhilsForum.com

PS My final tip is to keep the coupon as simple as possible with as few rules and exceptions as possible. The easier it is to use, the happier your customers will be.

Don’t Marry Your Inventory

Yes, you bought it. But not for the long term. Your inventory is more like a one-night stand. Love it and leave it. Love it and sell it. Love it and let it go.

Today I am kicking a lot of my inventory to the curb. The Just for Fun Sale starts at 9:30am. Products that I loved were not loved quite so much by my customers. That’s okay. We marked them down and are going to find them all good homes.

Most of this stuff has been here less than 18 months, some less than a year, some came in just last fall. If I ordered a case of six of something and could only sell two during the busy holiday rush, those other four pieces left behind aren’t going to sell without some help.

Before we got a POS system, I would hear the wedding bells of buyers telling me, “That’s a must-have, Phil. We need to stock up on those.” After the POS showed we only sold 1 of the 24 pieces on hand over the past two years, the wedding vows would be echoing, “But I love this item. It just needs time to sell.” Or I would hear the classic toast of, “I can’t afford to mark this down…”

Don’t marry your inventory. Love it and let it go.

Makes it easier when you count your inventory, too. Missing a few items? Shoplifters got some goodies? Do the math. How much is missing? If your shrinkage is less than 1% of your sales, you’re doing pretty darn good. Years ago the National Retail Federation stated that annual shrinkage is around 3%, with employee theft being the biggest part of that, followed by customer theft and employee errors (either at the cashwrap or at the receiving end).

You are going to be shoplifted. You are not immune to theft. Put in all the cameras and security measures you want. Won’t stop it completely. Wal-Mart has cameras and other security measures and still about $500,000 goes missing per store. It is just the cost of doing business. If that cost is less than 1%, then you’re doing things right. Don’t lament the loss.

Inventory is a means to an end. Its sole purpose is to move out the door one way or another and find its long-term lover, so that you can replace it and move on. That lover is not you. You are just the go-between, the rebound guy, the pimp.

Don’t marry your inventory. Go find it the love of its life – at whatever cost – and move on.

-Phil Wrzesinski
www.PhilsForum.com

PS Your end game is to get the customers to love the product more than you love it. Plain and simple. The most profitable way is better merchandising. Give the product good exposure on the shelf, a sign, a spotlight, or whatever it takes to make the product shine. But if that doesn’t work, dump it and move on. The sooner the better.

How Much Cash is Enough?

(Warning: This post includes math. If you wish to stick your head in the sand and stay away from all things math, do so now.)

This is a big question at the end of the year for pretty much all retailers, especially us seasonal retailers. We’re flush with cash from the big Christmas season. We’re thinking we want to give ourselves a nice bonus, possibly pay down a loan, or even bonus the employees who worked so hard.

We just want to make sure we have enough cash for the upcoming year. But how much cash is enough?

You need to calculate two numbers – Current Ratio and Cash-to-Current Liabilities Ratio.

To do that, you need a Balance Sheet from January 1st. Your accounting software can easily print that for you. (If you don’t have any accounting software, take some of that cash and invest in Quickbooks and a class on how to use Quickbooks – it will pay for itself in one year!)

On your Balance Sheet locate these three numbers.

  • Current Assets
  • Cash
  • Current Liabilities

The Current Ratio is calculated like this:

Current Assets divided by Current Liabilities = Current Ratio

The answer will typically be shown as a number like 2.9. A good rule of thumb is to have a ratio of 1.5 or higher. Typically seasonal businesses at the end of their season will have a ratio around 3.0 or higher. If your number is around 3.0, that’s pretty good.

The Cash-to-Current Liabilities Ratio is calculated like this:

Cash divided by Current Liabilities = Cash-to-Current Liabilities Ratio

The answer will typically be shown as a percentage like 75%. For some businesses you would ideally like between 10-20%. But for seasonal businesses entering their slower season, you will want much more, as much as 70-80%. If you are a seasonal fourth quarter business, 75% is a good number to have right now.

Separately, the two numbers only tell part of the story. The key is to look at both together. If both numbers look good, then your only real worry is deciding what to do with the extra cash. If both numbers are weak, then you have some tough decisions to make to try to raise some cash and get cash flow under control.

But when one is weak and the other strong, there are a number of issues at play.

If the Current Ratio is strong but the Cash-to-Current Liabilities is weak, then you likely have too much inventory. That may be on purpose because you got a good buy or are planning an expansion or are growing inventory for the upcoming season. Or it may be that you bought too much last year and are carrying excess inventory. It might be time to have a sale.

If your Current Ratio is weak but Cash-to-Current Liabilities is strong, you need to start writing orders and building up your inventory.

The math isn’t that hard to do. The results, however, tell you a lot about the health of your business. Don’t ever be afraid of the Math.

-Phil Wrzesinski
www.PhilsForum.com

PS If you are a summer seasonal business go pull your Balance Sheet from the end of your season and do those calculations from there. If you are not a seasonal business (doing 40% or more of your annual business in one quarter), then you don’t need the big build-up of cash so those numbers can be much lower. Just keep an eye on them each month.

When to Stop Buying

Christmas is just over two weeks away. Your inventory is running down. You know about the holes on the shelves that you have secretly covered up by spreading things out. You know what you’re out of stock and won’t be able to get back in before Christmas. You’re worried you won’t have enough inventory to make the sales you need that final week of the season. You grab your line lists to see who will ship the fastest and what deal they are offering this week. You crunch the numbers and start writing the orders. You get into a frenzy, one order after the other, loading up on anything that will ship right away so that shelves don’t look bare. You start to sweat. Panic grips you. One more order…

Stop!

Step away from the computer!

Don’t send those faxes or emails!

Take a deep breath and relax. I know that scenario above. Lived through it a few times. A lot of retailers make this same mistake this time every year. We panic. Did we buy enough? We think no and start writing orders for a lot of things that probably aren’t going to sell and we get stuck with a bunch of inventory in January and not a lot of cash.

Before you place one more order this week, ask yourself these three questions:

  1. Will this product sell in January? Chances are really good that most of what you order this week will end up being shelf-fillers – products that make your store look full, but don’t completely sell through. Even the hot items rarely sell out that last order. But if it is truly hot, it will sell next month. If you know the product will sell after the holidays, proceed. If it is only a holiday-time item, count your blessings that you didn’t have any carry-over and move on.
  2. Will this purchase put me over my budget? You do have a budget, right? You do have a projected sales number in mind along with an ending inventory number you hope to hit? You do know how much is currently on order and how much you still need to buy? Without a plan, over-buying is almost imperative. Plan your purchases around your Ending Inventory plus Expected Sales minus your Current Inventory. 
  3. Do I (will I) have the cash to afford this order? If you have been paying attention to your cash flow and, then you know whether you can afford this order. If the cash flow says you can afford it and the other questions are also answered yes, then go for it. But even if your budget says you need to buy more, but the cash flow does not, go with the cash flow. Better to have cash in January than inventory. 

If any of those questions are even a shaky yes, talk yourself down off the ledge, push the pencil away, and go out on the floor and sell something.

-Phil Wrzesinski
www.PhilsForum.com

PS Our customers are the ones to be induced into over-buying, not you. 😉

How Much Are You Investing in Your Business?

The Jackson County Chamber and I are teaming up to offer the best segments from the Jackson Retail Success Academy for all Jackson area businesses (and anyone willing to make the drive).

Three classes. Three four-hour days. $250 investment in your business (or $99 per class if you cannot make all three or are not a retailer.)

Inventory Management and Financial Health for Retailers
Thursday, June 27 (9am to 1pm) 

Every retailer knows that Cash is King. But do you know how to get more cash in your business to grow your kingdom?

This Business Boot Camp is designed strictly to help retailers understand how to manage inventory and expenses and, most importantly, your cash. You will learn simple formulas that the smart retailers use to keep the checkbook fat and happy. You will learn the Do’s and Don’t’s for keeping your inventory fresh and moving. You will find out where your cash is hiding and how to get more of it.

We will discuss things like Open-To-Buy programs, financial statements, the proper numbers to measure, how to price your products for profit, and the simplest way to get the most out of the inventory you sell.

Yes, there will be math. The important math. The kind of math you have to do if you want to be successful. What will surprise you is how quickly and easily you will learn the math and see the results.

(Note: to get the most out of this Business Boot Camp bring your previous fiscal year’s Balance Sheet and Profit & Loss statement. You will not be asked to share, but it will help you do your own math.)

Shareworthy Customer Service for Small Businesses
Thursday, July 11 (9am to 1pm)

We all know Word-of-Mouth is the best form of advertising. But do you know how to get people to talk about your company?

This Business Boot Camp will teach you the fundamentals behind generating Word-of-Mouth from your customer base. You will learn how to exceed customer expectations in such a way that they have to tell someone else. You will learn how to create a culture in your business that wants to delight your customers at every turn and raise the bar of Customer Service so high that you turn clients into evangelists.

Whether you are a retailer, a service provider, or any type of business, you will walk away with four ways to generate word-of-mouth, a new approach to hiring and training, at least one planned staff training, and a better understanding of what it takes to offer Customer Service that makes people want to talk.

Word-of-Mouth is still the most powerful form of advertising. This Business Boot Camp will be one you will be talking about for a long time.

Branding and Advertising: Reaching New Customers in Today’s Market
Thursday, August 8 (9am to 1pm)

The advertising that got you results yesterday isn’t working today. Today’s market just can’t be reached. Or can it?

This Business Boot Camp will teach you the fundamentals of marketing that work in any day and age and how to apply those to this day and age. You will learn what moves the needle in advertising and how to craft a message that gets your potential clients to take action. You will learn the biggest myths of advertising and how even the largest companies throw good money away every single day. You will learn how to get the most out of your advertising budget (even if it close to zero).

Advertising cannot fix your business, but if you have a good business model, you will learn techniques that will grow your business the right way and keep it growing for years, no matter what kind of business you run.

Contact the Jackson County Chamber of Commerce to sign up. It will be the best twelve hours you spend on your business this summer!

Phil Wrzesinski
www.PhilsForum.com

PS If you are struggling in any one of these areas, you should sign up for that one class Ninety-nine dollars for four hours of top-level, hands-on instruction is the kind of no-brainer investment you know you should make for your business.

PPS If you don’t think you need any of these classes then you should definitely sign up for all three. Last night as I did a presentation for the Quincy Chamber of Commerce, one of the organizers lamented that it was only the businesses who were already doing well that showed up. I reminded her that was why they were doing well. They kept showing up.

The Last Buy

The season is almost over and you’re out of a lot of things. Do you make that Last Buy?

This is a question that haunts all retailers.

If you don’t make the buy, you run the risk of not having what the customer wants which means you lose the sales and you lose their trust. If you do make the buy, you run the risk of having it show up too late and being  stuck with inventory you cannot sell.

Dilemma…

Here is how to think about it…

Ask yourself why you are out of stock. Did you not buy enough to begin with or did you have an extremely good, better-than-expected run on that product?

If your answer is the latter, you may just want to smile and say thank you to the retail gods for giving you a winner and go home and count your money. Forget all about that Last Buy (it’s like trying to double your money at the casino on the last bet of the night – a sucker bet at best).

If your answer is the former, you might want to consider why you didn’t buy enough. Was it cash flow concerns or was it just projecting too conservatively? If it was cash flow concerns, think twice before you make the Last Buy. It is a fast road back into cash flow hell.

About the only time you should make the Last Buy is when it is a product you can sell after the season is over and you have the cash to do it.

The best thing to do is to eliminate the temptation in the first place. Overbuy the must-haves. Always project higher on the items people come in asking for by name. Have extras on hand of those items and you won’t have to make a Last Buy on them. Everything else? Let it go. When you run out for the season, you run out.

The key is identifying the must-haves. If you are out of things people don’t come in asking for, no one will notice. If you are out of things people buy from you all the time, they will notice and they will quit coming to buy them from you.

Don’t run out of those items.

-Phil Wrzesinski
www.PhilsForum.com

PS You know what the must-haves are. The stuff you order every single time without having to look at a report. The stuff your customers ask for the moment they walk through the door. The stuff that sells 3x faster than the average item.