For the small retailer maintaining a good amount of cash is one most difficult task that small business owners have to face. That is because there’re cash demands that come up on a daily, weekly or quarterly basis that includes accounts payable, payroll, and taxes and most do not create any budget.
Whereas an average business owner usually will get strapped for the cash at various points when they grow a company, so here are a few strategies shared by Lyle Advisors that will help to ease such a situation and help you to finance your retail shop in a better way.
Personal Finance Tips Shared by Lyle Advisors
Never Go Big
When you’re starting out, you might get tempted to get the biggest space possible. But, rent is one major thing for any business, so ideally you have to keep the costs low, particularly at the starting of your retail business. Rather than aiming for the dream space immediately, try and find the modest one, which offers you a good location, and costs less.
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So, by limiting your overhead in rent, you will free up your liquid cash to take some other financial risks, and invest back in your business. After that, when your business expands, you can move in the bigger digs in case you outgrow the first space.
Budget for High Purchases
One more benefit of understanding the cash flow is it will help you to better budget for any major expenditures that your retail shop has to make, like buying the new POS system and store fixtures. Just by setting aside some money during the busy season, this allows you budget for the big-ticket items that you may struggle paying for during the leaner months.
One method to do is by taking an amount of money that you want for the purchase and building this in your budget or annual forecast. It can give you a little overview of the overall spending, and help you to decide if you will afford to make the major purchase now and if it has to get postponed.
Stay Away From Fraud
The new retail shop owners are highly susceptible to tax-related fraud. The new business owners give away plenty of personal details to a lot of different banks, suppliers and contractors, and increased risk of the information going in the wrong hands.
Most of the business-related fraud generally results from the illegally acquired Employee ID Numbers that are used to file the bogus W2 forms. Suppose it occurs, IRS can place the burden of proof over you to prove the fraud has happened. You need to develop an organized system for protecting and storing employment records as well as maintain a log of who had access to such information.
Keep Proper Financial Records
Suppose you do not know how much the retail business is earning and spending, it is just impossible for the business to work for long. The key to any successful business will be accurate bookkeeping. It means to maintain the financial records of each and everything like normal sales, expenses incurred for business development, medical expense deduction for employees, etc. through the accounting software program.
Suppose you are not very good with the finances or strapped for time, then hire the bookkeeper who will track proper of your finances. But, that does not mean you must not be looking at books yourself. Know how to read the balance sheet, and ensure that you understand the business’s cash flow.
Invest in Point-of-Sale System
The savvy retail owners exactly know that the best investments to make in the business are getting the point-of-sale or POS system that will manage the transactions, accept the credit card payments, provide reports and track inventory. Most of the POS systems also will integrate with the accounting systems, and simplifying bookkeeping.
An ability to track down the inventory highly streamlines the process of inventory management, as you will know when the stock is low over the popular item, and see which items just are not selling.
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Whereas there are some financials you must keep your eye on, the critical financials should be rightly tracked to identify the good and the bad trends. They can help you to take some corrective actions in place of shooting from far. Knowledge is power & way to know where you’re headed. Do not be afraid about financials, and take complete control of your retail business so that you will reach the success that you desire.