MIKE! Our cash flow statement is
showing three negative months.
We have shaved expenses as much
as we can. Do you have any suggestions as to how we can bring it
into line?
You have written to me before concerning your cash flow statement.
You may think you have done everything possible to correct the situation but you must go “go back
to the drawing board” and rework
your numbers. You will need to
cut more or find a way to increase
your sales so that you will bring in
more money than you are spending. Look carefully at each month.
Is there a slower month in which
you can make an extra push to increase sales? Can you move some
receipts to a future month? Are you
able to get some of your vendors
to extend your payment terms?
By trimming your expenses, ad-
justing your purchases, canceling
some orders until your situation
improves, and promoting in op-
portune times, you should be able
to improve your cash flow. You do
not have a choice. You can’t keep
spending more money than your
business is bringing in.
MIKE! Do you think sponsoring
a local sports team is a good idea
for our business?
I think any involvement in community affairs and events is an excellent idea providing your heart
is in the right place. If your only
focus is to attract people to your
shop, your transparency will be
obvious and your program unsuccessful. However, if you are sincere
and contribute time and talent to
the cause; you should reap benefits
for your efforts. Work in partnership with the event planners and
develop a long-term plan. The
plan should include a public relations plan that will draw people to
the event and to the shop. That is
what I call a “win-win” situation
since both parties benefit. If possible, sponsor a fund raising event
in the shop. Invite the press (
newsprint, TV, and radio) and prepare a
“press release” that can be distributed to interested reporters.
MIKE! Where can we find sales
reps for our line of merchandise?
When seeking sales representatives, I like to visit them in person.
The best place to see sales reps
and the lines they represent is at
the various national and regional
trade shows. You will be able to review the products that will compliment your products and not compete with them. In addition, your
face-to-face discussions will reveal
whether the potential sales rep is
enthusiastic about your product
line or just looking to add lines to
his or her bag. You can advertise in
the trade press (print and electronic). However, this type of advertising will result in your receiving
many resumes and this may prove
to be too difficult for you to manage. You will not be able to put a
face to a name and you will not be
able view the product lines being
represented. You will not be able
to read facial expressions or body
language as you discuss the merits
of your products. In my opinion,
these are all key issues when retaining a sales rep or hiring an employee to represent your company.
By assessing the prospective sales
reps strong points as well as weak
points, you will be better prepared
to make an informed decision
about retaining a specific sales rep
or rep group.
MIKE! As a supplier, we are con-
stantly badgered to have lower
prices. We think our prices are
competitive considering our qual-
ity and we are concerned about
reducing our quality standards to
meet price demands. What is your
opinion on this?
You can’t be all things to all people.
You must determine how you want
your customers to perceive your
business and the products you are
bringing to the market. There is a
danger in constantly shaving costs.
On one hand, you erode your margins and eliminate any “buffer”
that will absorb additional markdowns or other concessions you
may have to give to maintain and
grow your business. On the other
hand, cutting your quality in order
to satisfy a specific price point may
result in customer returns due to
inferior quality or market rejection
in general. In addition, if you use
inferior parts, paint, and supplies,
you may be opening the door to
greater problems. I am referring to
the problems we have read about
concerning lead content and other
dangers to the consumer. At no
time should you jeopardize your
livelihood by gambling with your
quality.
Since you are focusing on quality issues, you should market this
fact to both your customer base
and your sales force. Discuss the
uniqueness of your products and
the differences between your
Ask Mike
by Mike Russo, President, Gift Association of America
Gift & Home Interactive
August 2010
