Pretend you are opening a new business…today. Stop praying for a miracle.
Today is Black Friday. Let’s see what happens. Retailers will try and put a positive spin on things no matter how bad it really is, to lure shoppers in, making them feel comfortable spending money they cannot afford to spend or do not want spend. But even if sales are stronger than expected, one weekend does not make a season or a year. Worse thinking is believing strong sales mean strong profits if everyone is buying deep discounts and loss leaders.
Here are the issues. Many retailers could not raise the capital required to purchase what they need for this season as credit has vaporized. Many retailers have resorted to using their credit cards with outrageous interest rates which absorb profits if not paid back quickly. In fact more credit cards have reduced ceilings and cannot support your needs anyways.
People are no longer buying as much junk as previously, quality and a good deal is what is required.
So this is what your mindset and plan must be. It is not merely reducing inventories and praying for a resurgence, or waiting for things to get better. It is about recasting your business model to be profitable given the issues at hand such as:
1. Increased overhead, constantly creeping upwards and in many cases galloping upwards.
2. Evaporation of credit.
3. Changing buying habits. Crucial issue which must be recognized evaluated and dealt with.
4. A need to refocus on internal systems, streamline and tighten, controls are necessary and profit must be monitored at all times, if you are to stay in the game.
5. Debt must be worked out, reduced, eliminated, and somehow handled. You cannot pay the same debt with half the revenue and lower profits.
It is as if you are launching a new business, and need a new business formula. What worked last year, will not work this year. Review everything you are doing and reinvent yourself for success given the current circumstances.
If you cannot do this, then design an exit strategy and focus on working out your personally guaranteed debt. Do not just continue the same old thing and expect anything to change…It won’t. You must make the changes required and adjust to the new economy. It can be done.
