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David Brown

3 Ways To Inject Cash Into Your Jewelry Business

And why discounting may actually lead to more problems in certain scenarios.

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MANAGING CASH FLOW is the lifeblood of any business … even more so now that recent events have dictated the ability to receive cash coming into your business. Now more than ever, you need to be able to balance the difference between inwards and outwards cash.

Let’s start by defining cash. This is not a reference to pieces of paper with famous deceased people on them. We are talking about your bank balance — the ballast that can help keep your business afloat. Whether it’s via hard currency or through online payment, your bank balance is the measure of days you can continue to trade if your sales are lower than your costs.

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The priority right now is to have your cash buffer as large as possible. You can do this in two ways: by increasing your sales or by injecting money via private funds or through loans. Sales will provide a buffer if you are converting inventory you don’t need into cash or are doing it with a profit margin. But getting rid of old product at cost to then find yourself replacing it at the same price (or worse, a higher price) doesn’t solve this issue. You must either sell profitably or sell product you don’t need to replace.

If you have a surplus of inventory, then consider this option to building your cash reserve. You can further help the amount of cash you retain from sales by addressing your costs. Your business will have fixed costs that exist whether you trade or not (e.g., fixed rent or wages where your staff aren’t on a commission) and variable costs (e.g., consumables or transaction fees) that move in proportion with how much you sell. The variable costs will tend to take care of themselves, but your fixed costs are the ones you need to target so you can keep more dollars from each sale in your bank.

If converting inventory to cash is not a possibility, then consider option two: an injection of funds.

Money has seldom been as cheaply available as it is now. Borrowing for your business is always about the margin you can make on those funds and the risk associated with the borrowings. This is the same criteria that a lender will consider: Do they have an ability to repay (is the profit margin on borrowing good enough to cover the borrowing costs?) and what chance is there that they can’t repay? Despite the affordability of money right now and the encouragement being given to banks to provide small business funding, you need a good business plan to borrow, both for the bank’s peace of mind and for yours. It’s never a good borrowing scenario if you end up going backwards — no matter how cheaply the money was available.

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Negotiating affordable loans may be an important step to keeping things going over the next 12 months, but do your math and recognize how you will finance this going forward.

David Brown is the President of The Edge Retail Academy (sister company of The Edge), who provide expert consulting services to help with all facets of your business including inventory management, staffing, sales techniques, financial growth and retirement planning...All custom-tailored to your store’s needs. By utilizing the power of The Edge, we analyze major Key Performance Indicators that point to your store’s current challenges and future opportunities. Edge Pulse is the ideal add-on to the Edge, to better understand critical sales and inventory data to improve business profitability. It benchmarks your store against 1100+ other Edge Users and ensures you stay on top of market trends. 877-569-8657, Ext. 001 or [email protected] or www.EdgeRetailAcademy.com

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If It’s Time to Consolidate, It’s Time to Call Wilkerson

When Tom Moses decided to close one of the two Moses Jewelers stores in western Pennsylvania, it was time to call in the experts. After reviewing two candidates, Moses, a co-owner of the 72 year-old business, decided to go with Wilkerson. The sale went better than expected. Concerned about running it during the pandemic, Moses says it might have helped the sale. “People wanted to get out, so there was pent-up demand,” he says. “Folks were not traveling so there was disposable income, and we don’t recall a single client commenting to us, feeling uncomfortable. It was busy in here!” And perhaps most importantly, Wilkerson was easy to deal with, he says, and Susan, their personal Wilkerson consultant, was knowledgeable, organized and “really good.” Now, the company can focus on their remaining location — without the hassle of carrying over merchandise that either wouldn’t fit or hadn’t sold. “The decision to hire Wilkerson was a good one,” says Moses.

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