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Laurie Owen: Watch Out for Signals of a Cash Crunch

The seeds of tomorrow’s crisis are being sown today. use this checklist so you aren’t caught off guard.

Published

17 years ago

October 1, 2008

Laurie Owen Instore October 2008 Issue

STORE OWNERS OFTEN get trapped because they don’t heed the messages their business sends, and they don’t pay attention to basic principles. This checklist represents danger signals that have a clear and negative effect on cash flow. Take a few minutes under the harsh, cold light of reality to ask yourself how many of the following danger signals exist in your business and then evaluate their implications:

Inventory Management

No physical inventory taken on a regular basis.
Lots of old inventory and no plan to get rid of it.
Buying at trade shows without a purchasing plan.
Buying for brand names versus targeted gross margin and turn.
No knowledge of what actual price points sell in your store.
Lack of a good point-of-sale system that shows your gross margin, turns and return on inventory by department.

Purchasing

Supplier discounts rarely taken.
Offering credit to boost sales.
Buying from vendors because you can’t say no.

Banking Relationship]

No on-going communication between you and your banker.
Credit line not completely paid off each year for at least 30 days.
Short-term credit like credit lines used for long-term assets such as store expansions or leasehold improvements.

Accounting Practices

You brag to others about how much money you save by doing your own books.
Bank statements not reconciled every month.
The same person who does your books also deposits your checks, pays your bills, opens your mail, never goes on vacation, etc.
Balance sheet is prepared only at the end of the year, and then used only for tax purposes.
You don’t get accurate monthly statements (income statement and balance sheet) by the 15th of the following month.
You spend more time avoiding taxes than you do actually figuring out how your business is doing.

Danger signals are just that — signals. The longer you wait, the fewer options you will have. Now is the time to gain control and keep it. Get ahead of the game and be in a much better position to weather whatever rough seas lie ahead.

This story is from the October 2008 edition of INSTORE.

Family Legacy, New Chapter: How Wilkerson Turns 89 Years of History Into Future Success

After 89 years of serving the Albany community, Harold Finkle Your Jeweler faced a pivotal decision. For third-generation owner Justin Finkle, the demanding hours of running a small business were taking precious time away from his young family. "After 23 years, I decided this was the time for me," Finkle explains. But closing a business with nearly nine decades of inventory and customer relationships isn't something easily managed alone. Wilkerson's comprehensive approach transformed this challenging transition into a remarkable success story. Their strategic planning handled everything from advertising and social media to inventory management and staffing — elements that would overwhelm most jewelers attempting to navigate a closing sale independently. The results speak volumes. "Wilkerson gave us three different tiers of potential goals," Finkle notes. "We've reached that third tier, that highest goal already, and we still have two weeks left of the sale." The partnership didn't just meet financial objectives—it exceeded them ahead of schedule.