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There are few things more important to a retail store than cash flow and inventory management. Smart retailers are always balancing planning for the next buying season with moving aging inventory off of shelves. At Faire’s learning event, Reshaping Retail, Management One CEO Nate Sheth explained four steps to help you gain control of your balance sheet to keep your store agile and profitable through every buying season.
Watch the video for the full rundown of cash flow optimization tips!
4 key takeaways from the session
As CEO of a leading provider of retail inventory planning, insights, and education, Nate Sheth has seen it all. He grew up working in a family store and now as a consultant, he’s seen all of the most common retail inventory mistakes business owners can make. Nate brought his wealth of experience to the session along with the following four actionable strategies that you can start implementing today:
Audit all expenses with an eye on payroll
There are several ways to cut costs and improve cash flow for your business, but first, you need to audit your expenses to see where your money is going. Generally speaking, payroll costs should not make up more than 20% of your expenses, and other costs such as rent should not make up more than 10% of your total expenses.
Take immediate action on underperforming inventory
Frequent audits are an essential component of any good inventory management strategy. Ideally, you should conduct an inventory audit every few months so you can take immediate action on any merchandise that isn’t performing. A detailed inventory audit involves comparing your financial records with your physical inventory to detect any discrepancies and assessing sell-through rates so you can mark down underperforming items for immediate sale.
Reduce inventory carrying costs
Your inventory should be making money for you, but it can start draining your profits when it’s been sitting around for too long. To reduce carrying costs, always avoid buying more than you need, get to know the optimal reorder point for bestsellers, clear out underperforming and outdated merchandise every season, closely monitor your KPIs, and find the right tools to forecast your inventory needs for upcoming buying seasons.
Create a realistic cash flow projection
A realistic cash flow projection is essential for any good inventory management strategy. You can project future cash flow by analyzing sales data from previous seasons and making informed predictions about profits and expenses for future seasons. It’s never possible to project with 100% certainty, but accurate and timely data can help you make more reliable predictions and avoid being blindsided by cash flow surprises.
Faire makes it easy to follow the data
Faire’s POS integrations can also help you improve your inventory management and cash flow strategies by providing timely, accurate data automatically. Integrating your POS with Faire makes it easy to see your current inventory levels when shopping on Faire so you always know what you have and when to order more. Whether you use Shopify, Square, or Clover, this can save hours of time that you would have otherwise spent manually entering the necessary data to make more accurate cash flow projections.
Watch the playlist of all sessions and subscribe to the Faire YouTube channel.
About the speaker:
Nate Sheth is an accomplished business leader with a broad range of experience in both the United States and Asia. He has worked with businesses in all industries and is able to bring operating lessons from varied sources to creatively solve problems. Nate has a B.S. from Villanova University and an MBA from the Wharton School at the University of Pennsylvania. He currently resides in San Francisco, where he enjoys hiking the local trails and whale watching.
