Store Closing Sale
How To Avoid Needing A Store Closing Or Going Out Of Business Sale
Nov/12/2009 10:49
I
write and advise small retailers every day on how to
best use a Store Closing Sale to exit their retail
business . Today I want to share some toughts on how
to avoid needing to have a Store Closing Sale.
Business is going to continue to be tough. Here are
some ideas on how to keep your customers shopping at
your store.
1. Continue to market your business. History shows that those who stop marketing during a recession are the first to disappear.
2. Focus on your exisiting customers. It's more profitable to sell to someone that knows and trust you, than to spend money trying to earn a new customer.
3. Listen to customers. It will help you discover their needs and carry products to meet those needs.
4. Focus on the neighborhood. For most retailers, your primary market is within a two to five mile radius of their store.
5. Emphasize value in all of your marketing messages.
6. Be polite and greet customers as they enter your store and thank them as they leave.
7. Consider a loyalty program. It doesn't have to be complicated. It can be as simple as a punch card.
8. Know who your customers are. Build and maintain a current customer list - street addresses and email addresses.
9. Contact each customer at least four times a year - the more communciation the better.
10. Remember your customer is your greatess asset - without them you have no business.
1. Continue to market your business. History shows that those who stop marketing during a recession are the first to disappear.
2. Focus on your exisiting customers. It's more profitable to sell to someone that knows and trust you, than to spend money trying to earn a new customer.
3. Listen to customers. It will help you discover their needs and carry products to meet those needs.
4. Focus on the neighborhood. For most retailers, your primary market is within a two to five mile radius of their store.
5. Emphasize value in all of your marketing messages.
6. Be polite and greet customers as they enter your store and thank them as they leave.
7. Consider a loyalty program. It doesn't have to be complicated. It can be as simple as a punch card.
8. Know who your customers are. Build and maintain a current customer list - street addresses and email addresses.
9. Contact each customer at least four times a year - the more communciation the better.
10. Remember your customer is your greatess asset - without them you have no business.
The Holiday Season - The Best Time For A Store Closing Sale
Nov/10/2009 08:54
The
last two months of the year is the best time to
conduct your Store Closing Sale or Going Out of
Business Sale if your goal is to maximize your return
on investment. This is especially true this year with
the current recession. The last three months of the
year provide the highest volume and profitability for
the vast majority of retailers. This makes the last
quarter the best time to conduct your Store Closing
Sale. Here's why:
• The holiday season is the best time of the year for most retailers. A Store Closing Sale is the fastest and safest way to sell a store for the highest possible cash price.
• A Closing Sale during the last quarter allows your inventory to be sold out at the highest possible profit margins, in the shortest period of time, with the lowest advertising and other expenses, thus maximizing your return.
• All sales are cash, and your cash flow becomes positive almost immediately.
• Consumers always spend more for the holidays and are more likely to shop a well-planned and advertised Store Closing Sale. Price conscious consumers are more attracted to these sales than ever before.
• The holiday season is the best time of the year for most retailers. A Store Closing Sale is the fastest and safest way to sell a store for the highest possible cash price.
• A Closing Sale during the last quarter allows your inventory to be sold out at the highest possible profit margins, in the shortest period of time, with the lowest advertising and other expenses, thus maximizing your return.
• All sales are cash, and your cash flow becomes positive almost immediately.
• Consumers always spend more for the holidays and are more likely to shop a well-planned and advertised Store Closing Sale. Price conscious consumers are more attracted to these sales than ever before.
To Announce A Store Closing Sale Which Is Better - Letter or Postcard
Oct/30/2009 10:23
To
kick-off a Store Closing Sale or Going-Out-Of
Business Sale most small retailers use a direct
marketing campaign to announce the sale. I am often
ask, “Is it better to use a letter or a postcard to
announce the sale.
Here’s my standard answer – “Depends”. What does it depend on? It depends on if you are sending out your direct marketing piece to your store’s customer mailing list or if you are doing a saturation mailing to people living in a given radius of your store.
If you are mailing to your customer mailing list you should use a letter that details information about your sale, gives a brief explanation as to why you are closing and thanks your customer for their past support. If you have a positive relationship with that customer, your return address will assure that the piece gets opened.
If you are doing a saturation mailing to people living in a given radius around your store, a postcard often gets a better response. A postcard with a powerful image or message on the front will almost always be turned over and the details about the sale read. You have no past relationship with most of these people, so they are not concerned about the “whys” of the sale. The chances of a direct mail letter being open by this group is small and most of your letters will wind up in the trash without being open.
Here at CCH Consulting, when possible we use both methods depending on the source of the mailing list. Many times we will use a combination of letters and postcards. If you have a small customer mailing list, we send letters to that group and then supplement that mailing with a saturation mailing using postcards.
For more information and tips on store closing sales or marketing for the small retailer visit our web site http://www.solutionsforretailers.com. To contact CCH Consulting email chuckhaug@solutionsforretailers.com or call 520-305-9693
Here’s my standard answer – “Depends”. What does it depend on? It depends on if you are sending out your direct marketing piece to your store’s customer mailing list or if you are doing a saturation mailing to people living in a given radius of your store.
If you are mailing to your customer mailing list you should use a letter that details information about your sale, gives a brief explanation as to why you are closing and thanks your customer for their past support. If you have a positive relationship with that customer, your return address will assure that the piece gets opened.
If you are doing a saturation mailing to people living in a given radius around your store, a postcard often gets a better response. A postcard with a powerful image or message on the front will almost always be turned over and the details about the sale read. You have no past relationship with most of these people, so they are not concerned about the “whys” of the sale. The chances of a direct mail letter being open by this group is small and most of your letters will wind up in the trash without being open.
Here at CCH Consulting, when possible we use both methods depending on the source of the mailing list. Many times we will use a combination of letters and postcards. If you have a small customer mailing list, we send letters to that group and then supplement that mailing with a saturation mailing using postcards.
For more information and tips on store closing sales or marketing for the small retailer visit our web site http://www.solutionsforretailers.com. To contact CCH Consulting email chuckhaug@solutionsforretailers.com or call 520-305-9693
How Small Retailers Can Avoid Conducting A Store Closing Sale.
Oct/29/2009 10:29
How Small Retailers Can Avoid Having A Store Closing
Sale
Small retailers need to understand that their store's success is rooted in building long-standing customer relationships. They should nurture their best customers by learning and remembering individual preferences and interests, acquiring this information directly from customers through personal interactions. And they should keep in touch with customers by offering mailing list sign-ups for newsletters, pre-sale announcements, coupons and mailings about other upcoming store events. These sign-ups should capture the customer’s email address also.
All to often when I ask a prospective client, “How many names are on your customer list”, I hear - “We don’t have a customer list”.
Small retailers need to grasp the importance of building customer relationships through personal communication and growing their profits through repeat sales. Studies show that repeat customers:
• buy more often,
• spend more than first-time customers,
• cost less to acquire (because they already know your business), and
• even pay a premium price for your product.
And repeat customers refer new customers. Add this up, and a repeat customer yield big profits over time.
Small retailers need to understand that their store's success is rooted in building long-standing customer relationships. They should nurture their best customers by learning and remembering individual preferences and interests, acquiring this information directly from customers through personal interactions. And they should keep in touch with customers by offering mailing list sign-ups for newsletters, pre-sale announcements, coupons and mailings about other upcoming store events. These sign-ups should capture the customer’s email address also.
All to often when I ask a prospective client, “How many names are on your customer list”, I hear - “We don’t have a customer list”.
Small retailers need to grasp the importance of building customer relationships through personal communication and growing their profits through repeat sales. Studies show that repeat customers:
• buy more often,
• spend more than first-time customers,
• cost less to acquire (because they already know your business), and
• even pay a premium price for your product.
And repeat customers refer new customers. Add this up, and a repeat customer yield big profits over time.
The Best Way For Most Small Retailers To Plan & Conduct A Store Closing Sale.
Oct/22/2009 10:42
It’s
proven that the best way for most small retailers to
exit their retail business is to conduct a store
closing or going out of business sale. In my two
previous blogs I wrote about the two polar approaches
to conducting a store closing sale, doing it yourself
or contracting with an experienced retail
professional that specializes in store closing sales
to be on site and to do it for you. As with most
things in life, the best approach for most small
retailers lies somewhere between the two poles.
Conducting a store closing sale for most retailers is hopefully only a one-time experience. Therefore they are not experienced at the ins and outs of how to maximize the results. A retail specialist can bring that experience to the sale. In most cases the retailer does not need a full time consultant on site throughout the sale.
The key areas of support that small retailers require are, marketing, pricing, the selling of fixtures, equipment and displays and timing. None of these require a full time consultant on site.
I suggest very strongly that you talk to several retail consultants to find one that is willing to customize their services to meet your specific needs. Why pay for more than you need?
Conducting a store closing sale for most retailers is hopefully only a one-time experience. Therefore they are not experienced at the ins and outs of how to maximize the results. A retail specialist can bring that experience to the sale. In most cases the retailer does not need a full time consultant on site throughout the sale.
The key areas of support that small retailers require are, marketing, pricing, the selling of fixtures, equipment and displays and timing. None of these require a full time consultant on site.
I suggest very strongly that you talk to several retail consultants to find one that is willing to customize their services to meet your specific needs. Why pay for more than you need?
Store Closing Sale - Should You Do It Yourself?
Oct/20/2009 09:42
There are three different approaches you can take when you decide to have a Store Closing Sale or Going Out Of Business Sale. You can do it yourself, you can contract with a retail consultant that specializes in store closing sales to plan and manage the sale for you or you can use a consultant to handle only those areas that you feel you need extra support with.
Almost every small retailer considers doing it their-self at some point. For some this is a good decision and for others it's a disaster. Here are some circumstances and situations when the retailer should "Do-It-Yourself":
• Inventory Levels below $40,000
• Projected sales results are less than retailer's debt.
• Projected sales results are less than the cost consultant's fees and projected advertising cost.
• Retailer is a hard-head and knows he won't follow consultant's advise.
The key to a successful Store Closing Sale is to have a detailed plan before you start. You need to know:
• best time to run your sale
• how long your sale should be
• what kind of sales volume to expect
• your markdown strategy
• your merchandising strategies
• a source for good signs
• how to best use signs.
• most effective marketing media
• your advertising schedule
• how to sell fixtures and equipment
• staffing needs
• legal requirements
Planning and managing a Store Closing Sale is much different than conducting a normal sale. You have only one chance to do it and you need to do it right. Every retailer considering a Store Closing Sale should talk with a retail professional that specializes in this type sale. Ask about the services they offer, the cost of those services and the results that they forecast for your sale.
The deciding factor for most small retailers should be, do you have the experience, energy and time to plan and manage something as important as this or will an experienced retail consultant achieve results that will not only cover their fees, but put more money in your pocket.
Unless there are other circumstances, the bottom line should always be how do you put more money in your pocket at the end of the sale
Store Closing Sale - The Small Retailer's Best Exit Strategy
Oct/19/2009 11:29
There is
little doubt that a Store Closing Sale or Quitting
Business Sale is the best way for most small
retailers to exit their retail business.
A properly planned Store Closing or Going Out of Busines Sales will:
• maximize cash flow
• minimize expenses
• recover 100% - 130% of the cost of inventory
• sell fixtures & equipment for the highest possible price
• be completed in 60 - 90 days
So if you've decided that now is the time to close your retail store, no matter what the reason, you should conduct a Store Closing Sale or Going Out Of Business Sale. But what is the best way to do it? Should you:
• plan and implement the sale yourself?
• contract with a retail consultant that specializes in store closing sales to plan and manage your sale?
• use a retail consultant to support you only in areas that you feel you need help?
During each of the next three days we'll look at one of these approaches in depth, after which you'll have a good idea of the approach that is best for you.
A properly planned Store Closing or Going Out of Busines Sales will:
• maximize cash flow
• minimize expenses
• recover 100% - 130% of the cost of inventory
• sell fixtures & equipment for the highest possible price
• be completed in 60 - 90 days
So if you've decided that now is the time to close your retail store, no matter what the reason, you should conduct a Store Closing Sale or Going Out Of Business Sale. But what is the best way to do it? Should you:
• plan and implement the sale yourself?
• contract with a retail consultant that specializes in store closing sales to plan and manage your sale?
• use a retail consultant to support you only in areas that you feel you need help?
During each of the next three days we'll look at one of these approaches in depth, after which you'll have a good idea of the approach that is best for you.
When it’s time to consider a Store Closing or Going Out of Business Sale
Oct/16/2009 09:56
The
year 2009 is quickly coming to a close. For most
retailers and in particular the small independent
retailer, this year has been extremely tough. Many
are counting on the last two months to save their
business. My suggestion to those retailers is to take
a little time and evaluate if your business is still
viable or if you are just not willing to admit it’s
time to look for new opportunities.
Ask yourself the seven questions below:
• Am I adequately paying myself?
• Am I putting personal money into the business to meet daily expenses?
• Am I considering a home equity loan or using credit cards to pay bills?
• Have I significantly reduced advertising to save money?
• Is the business causing family stress or affecting my health?
• Has my market area deteriorated significantly?
• Am I burnt-out on retail?
If you answered “yes” to any of them, it might be time to consider a Store Closing or Going Out of Business Sale and this holiday season may be the best time to do it.
Ask yourself the seven questions below:
• Am I adequately paying myself?
• Am I putting personal money into the business to meet daily expenses?
• Am I considering a home equity loan or using credit cards to pay bills?
• Have I significantly reduced advertising to save money?
• Is the business causing family stress or affecting my health?
• Has my market area deteriorated significantly?
• Am I burnt-out on retail?
If you answered “yes” to any of them, it might be time to consider a Store Closing or Going Out of Business Sale and this holiday season may be the best time to do it.
Small Retailers Have A Right To Be Pessimistic
Oct/15/2009 08:31
As
we head into the holiday season, owners of small
retail stores are less hopeful, than other small
business owners according to a new study of small
businesses released by American Express OPEN.
Retail owner respondents were the least optimistic about the current business environment among all small-business owner respondents, according to the American Express OPEN Small Business Monitor.
Given their bleaker outlook, small-retail-business owners said they are taking severe measures to deal with the current downturn, such as:
* 50 percent instituted a hiring freeze.
* 40 percent asked family members to work for no pay.
* 37 percent mandated a salary freeze.
* 36 percent stopped taking salaries altogether.
* 34 percent tapped into their personal assets.
* 33 percent reduced employee hours.
* 21 percent took a second job.
Hopefully these stop-gap measures will help these small-retail-business owners make it through the recession, but they must be realistic and analyze their situation. It will be a long time before retail ever gets back to the levels of the early 2000’s. For many the current recession only accelerated their problems.
Retail is changing. The way people shop is changing. And the day of a trip to the mall to shop being a form of entertainment is over. On-line shopping continues to grow and as it continues to be more inter-active and part of the social media craze, it will make the brick and mortar store owners job even tougher.
For many small-retail-business owners the above actions are only draining their savings and retirement funds. The longer they wait, the less they will have when they finally close their doors. Yes, I said “close their doors”. The small retail business is next to impossible to sell and their best option is to conduct a Going Out of Business or Store Closing Sale.
Retail owner respondents were the least optimistic about the current business environment among all small-business owner respondents, according to the American Express OPEN Small Business Monitor.
Given their bleaker outlook, small-retail-business owners said they are taking severe measures to deal with the current downturn, such as:
* 50 percent instituted a hiring freeze.
* 40 percent asked family members to work for no pay.
* 37 percent mandated a salary freeze.
* 36 percent stopped taking salaries altogether.
* 34 percent tapped into their personal assets.
* 33 percent reduced employee hours.
* 21 percent took a second job.
Hopefully these stop-gap measures will help these small-retail-business owners make it through the recession, but they must be realistic and analyze their situation. It will be a long time before retail ever gets back to the levels of the early 2000’s. For many the current recession only accelerated their problems.
Retail is changing. The way people shop is changing. And the day of a trip to the mall to shop being a form of entertainment is over. On-line shopping continues to grow and as it continues to be more inter-active and part of the social media craze, it will make the brick and mortar store owners job even tougher.
For many small-retail-business owners the above actions are only draining their savings and retirement funds. The longer they wait, the less they will have when they finally close their doors. Yes, I said “close their doors”. The small retail business is next to impossible to sell and their best option is to conduct a Going Out of Business or Store Closing Sale.
A Store Closing Sale – One Of The Toughest Decisions You’ll Ever Make
Oct/14/2009 09:12
There are many reasons small retailers close their stores; declining sales, changing retail environment, personal or family illness, retirement, burn-out, loss of lease, too much competition and a hundred other very legitimate reasons. But no matter what the reason or how strong the need, making that decision is always extremely tough.
Seth Godin, author & professional bogger, posted “Make a decision” on Seth’s Blog. He points out that no matter what the outcome, making the actual decision is the most important thing. It is the starting point for all actions, and from there you can make any necessary adjustments. By not making a decision, you’re actually making one.
I’ve talked with hundreds of small retailers that were considering conducting a Store Closing or Going Out Of Business Sale that knew that they should close their store, but needed just a little more time to think about it. Guess what? The decision was never made. They didn’t make the decision to take action to solve the challenges that they faced with their business or did they make the decision that it was time to close their store.
Listen to Seth – right or wrong make a decision – it is the start to your solution.
Source: Seth’s Blog, read the full post here.
Selling A Small Retail Business - No Easy Task
Oct/13/2009 09:58
A
recent post on
Small Business Trends by
Anita Campbell, titled
“Up-tick in Businesses Being Sold, But Prices Are
Dropping” points
out that as the current recession levels out, the
number of small businesses being sold is starting to
pick up. The problem for the small business owner
that has to sell is that the pool of prospective
buyers still remains fairly small and those buyers
are looking for real bargains.
Selling any small business has always been tough, but selling a small retail business has been among the toughest sales. In reality, the best way for most small retailers to sell their business has been to sell it to their current customers. By that, I mean they will get more for their business by conducting a Going Out of Business or Store Closing Sale than by selling it as an on-going business to a bargain hunting buyer.
If you need or want to sell your small retail business, you should talk with a retail professional that specializes in conducting Going Out of Business and Store Closing Sales to determine if that is the right approach for you. They will be able to give you a good idea of the estimated sales volume from your Store Closing Sale, how long it should take and what their fees would be.
CCH Consulting, LLC offers this service. Visit the website a www.retailstoreclosing.com to learn more.
Selling any small business has always been tough, but selling a small retail business has been among the toughest sales. In reality, the best way for most small retailers to sell their business has been to sell it to their current customers. By that, I mean they will get more for their business by conducting a Going Out of Business or Store Closing Sale than by selling it as an on-going business to a bargain hunting buyer.
If you need or want to sell your small retail business, you should talk with a retail professional that specializes in conducting Going Out of Business and Store Closing Sales to determine if that is the right approach for you. They will be able to give you a good idea of the estimated sales volume from your Store Closing Sale, how long it should take and what their fees would be.
CCH Consulting, LLC offers this service. Visit the website a www.retailstoreclosing.com to learn more.
Store Closing Sale Signage - A Billboard for Success
Oct/12/2009 15:39
There
are many marketing tools available to the small
retailer when it comes time to conduct a Store
Closing Sale. None is more important than the use of
temporary signage to communicate your message to
passer-byers. This includes banners, window signs,
sidewalk signs and in some cases even the "sign
walker". No one should be able to walk or drive by
your store without knowing that there is something
special going on. Here are a couple of good examples.
Of course how many, what kind and where they are placed, depends on your particular location. In many communities, there are local sign ordinances that limit what you can do. Landlords often try to control your use of "Store Closing" or "Going-Out-Of Business" signs.My advice to most of my clients is that it is often best to ask for forgiveness than to seek permission ahead of time.(something I learned from my kids).
The effective use of signs can add up to 20% plus in your sales results. Signs are very cost effective - usually a couple hundred dollars will cover signs for both the interior and exterior.
Of course how many, what kind and where they are placed, depends on your particular location. In many communities, there are local sign ordinances that limit what you can do. Landlords often try to control your use of "Store Closing" or "Going-Out-Of Business" signs.My advice to most of my clients is that it is often best to ask for forgiveness than to seek permission ahead of time.(something I learned from my kids).
The effective use of signs can add up to 20% plus in your sales results. Signs are very cost effective - usually a couple hundred dollars will cover signs for both the interior and exterior.
Considering Closing Your Store - Trends To Be Aware Of
Oct/08/2009 10:32
Trends You Need To Consider
Retails sales in 2007-2008 were driven partly by higher gasoline costs as well as by deep price discounting during the holiday seasons by mass merchandisers. Meanwhile, automobile sales saw a disastrous drop off in 2008, with total sales of cars and light trucks for the year at about 13.2 million, down from about 16.5 million in 2007 and 17.5 million at the peak in 2005. Car sales in 2009 are still declining further and the future of American car manufactures is in question.
Retail sales in 2008 were affected by several factors:
1) Sales of both new and existing homes slowed dramatically. While homes themselves are not counted in retail sales figures, buyers of these homes are a significant force at retail stores where they purchase furniture, appliances, linens, consumer electronics and garden supplies to fill up their new residences. Likewise, builders and remodelers are a strong factor in retail sales, when they purchase supplies, materials, appliances, etc. at retail outlets. The slowdown in building and remodeling led to reduced sales at home centers such as Home Depot.
2) Another factor was home mortgages: From 1998 through part of 2006, Americans were refinancing their existing home mortgages in record-setting numbers. In doing so, they took advantage of very low mortgage interest rates and very easy lending requirements. Many homeowners also increased the balance on their mortgages, taking advantage of rapidly rising home values that increased their borrowing power. Borrowing against home equity lines of credit was also high, and much of that money went to retail purchases. Homeowners were spending this cash windfall freely, driving up retail sales in many categories. However, by late 2006, the slowing real estate market, followed by tougher lending standards, meant that the party was over. This definitely had a negative effect on retail sales.
3) Another major negative impact was the growing number of homes going into foreclosure as their owners were unable or unwilling to meet monthly payments. Many of these foreclosed homes are part of the sub-prime mortgage fiasco that is rocking financial markets, where borrowers have poor credit or inadequate income. Also, a large portion of foreclosed homes are those subject to rising monthly payments due to adjustable rate mortgages.
4) Unfortunately, consumers were forced to retrench in 2008, and that trend has accelerated in 2009. Current economic trends are tough on retail customers. They have fewer discretionary dollars left in their budgets after they face the challenges of high prices for energy, health care, food, insurance and mortgages. Meanwhile, job security has declined.
Negative factors impacting the retail sector:
• Extremely high consumer debt levels
• Higher health care costs for consumers
• Global terrorism, tension and uncertainty
• Consumers burdened with high energy costs
• A continuation of depressed conditions in the housing market
• Rising home mortgage foreclosures
• Layoffs and falling profits in a wide variety of business sectors
• Rising unemployment levels
• Tightened lending standards
• Extremely low consumer confidence
Consumers will be more conservative going forward, saving more while spending less. When they do spend, they will focus on high-value items with long life, low impact on the environment and low energy consumption. Items that promote a healthy lifestyle will receive a growing focus.
Meanwhile, competition among retailers has never been tougher. A retailer without a significant competitive advantage doesn’t stand a chance. Superstores are battling each other on every major corner while direct marketers (including catalogs and online sites) are stealing customers from stores. Online selling at deep discounts is even making immense inroads into major consumer purchases such as jewelry. Many retailers have been driven into bankruptcy recently, including Mervyn’s, Circuit City, Goodes, Sharper Image, Linens ‘n Things, Bombay Co., and mail order firm Lillian Vernon, and more will follow.
Growth in online shopping has been driven by two factors. First, the number of fast Internet connections in U.S. homes and businesses leapt to about 100 million by early 2008. These connections make buying online faster and more interactive. Next, there’s the savvy marketing of online giants like Amazon.com (with more than $14.8 billion in 2007 revenues, up dramatically from $10.7 billion in the previous year), as well as the e-commerce efforts of traditional retailers such as Home Depot and Wal-Mart. These fast Internet connections are extremely important, even at the office, since a large number of U.S. workers take time out to shop online from their desktops.
All current trends point to a tough time for retailing this Christmas. Among the rare bright spots are Wal-Mart and Costco, where consumers know they can find everyday low prices on high quality merchandise. On-line retail sales will continue to grow.
Retails sales in 2007-2008 were driven partly by higher gasoline costs as well as by deep price discounting during the holiday seasons by mass merchandisers. Meanwhile, automobile sales saw a disastrous drop off in 2008, with total sales of cars and light trucks for the year at about 13.2 million, down from about 16.5 million in 2007 and 17.5 million at the peak in 2005. Car sales in 2009 are still declining further and the future of American car manufactures is in question.
Retail sales in 2008 were affected by several factors:
1) Sales of both new and existing homes slowed dramatically. While homes themselves are not counted in retail sales figures, buyers of these homes are a significant force at retail stores where they purchase furniture, appliances, linens, consumer electronics and garden supplies to fill up their new residences. Likewise, builders and remodelers are a strong factor in retail sales, when they purchase supplies, materials, appliances, etc. at retail outlets. The slowdown in building and remodeling led to reduced sales at home centers such as Home Depot.
2) Another factor was home mortgages: From 1998 through part of 2006, Americans were refinancing their existing home mortgages in record-setting numbers. In doing so, they took advantage of very low mortgage interest rates and very easy lending requirements. Many homeowners also increased the balance on their mortgages, taking advantage of rapidly rising home values that increased their borrowing power. Borrowing against home equity lines of credit was also high, and much of that money went to retail purchases. Homeowners were spending this cash windfall freely, driving up retail sales in many categories. However, by late 2006, the slowing real estate market, followed by tougher lending standards, meant that the party was over. This definitely had a negative effect on retail sales.
3) Another major negative impact was the growing number of homes going into foreclosure as their owners were unable or unwilling to meet monthly payments. Many of these foreclosed homes are part of the sub-prime mortgage fiasco that is rocking financial markets, where borrowers have poor credit or inadequate income. Also, a large portion of foreclosed homes are those subject to rising monthly payments due to adjustable rate mortgages.
4) Unfortunately, consumers were forced to retrench in 2008, and that trend has accelerated in 2009. Current economic trends are tough on retail customers. They have fewer discretionary dollars left in their budgets after they face the challenges of high prices for energy, health care, food, insurance and mortgages. Meanwhile, job security has declined.
Negative factors impacting the retail sector:
• Extremely high consumer debt levels
• Higher health care costs for consumers
• Global terrorism, tension and uncertainty
• Consumers burdened with high energy costs
• A continuation of depressed conditions in the housing market
• Rising home mortgage foreclosures
• Layoffs and falling profits in a wide variety of business sectors
• Rising unemployment levels
• Tightened lending standards
• Extremely low consumer confidence
Consumers will be more conservative going forward, saving more while spending less. When they do spend, they will focus on high-value items with long life, low impact on the environment and low energy consumption. Items that promote a healthy lifestyle will receive a growing focus.
Meanwhile, competition among retailers has never been tougher. A retailer without a significant competitive advantage doesn’t stand a chance. Superstores are battling each other on every major corner while direct marketers (including catalogs and online sites) are stealing customers from stores. Online selling at deep discounts is even making immense inroads into major consumer purchases such as jewelry. Many retailers have been driven into bankruptcy recently, including Mervyn’s, Circuit City, Goodes, Sharper Image, Linens ‘n Things, Bombay Co., and mail order firm Lillian Vernon, and more will follow.
Growth in online shopping has been driven by two factors. First, the number of fast Internet connections in U.S. homes and businesses leapt to about 100 million by early 2008. These connections make buying online faster and more interactive. Next, there’s the savvy marketing of online giants like Amazon.com (with more than $14.8 billion in 2007 revenues, up dramatically from $10.7 billion in the previous year), as well as the e-commerce efforts of traditional retailers such as Home Depot and Wal-Mart. These fast Internet connections are extremely important, even at the office, since a large number of U.S. workers take time out to shop online from their desktops.
All current trends point to a tough time for retailing this Christmas. Among the rare bright spots are Wal-Mart and Costco, where consumers know they can find everyday low prices on high quality merchandise. On-line retail sales will continue to grow.
Small Retailers Moving To The Web
Sep/28/2009 05:29
There
is a trend developing in the small retailer
community. As the recession continues, business gets
tougher and customer foot traffic declines, many
small retailers are choosing to run a Store Closing
Sale.
But wait... they're not going out of business. They are simply changing their business model. Increasingly I am talking with small retailers who want to give up their brick and motar location and move to a "online only" operation.
The reasons - you can save a lot of money if you don't have to pay the high rent associated with good retail locations, you're open 24/7 but you only have to staff it when you like and your primary market area is no longer limited to the 2-5 mile radius around your store.
For specialty or niche retailers it's much easier to find large numbers of buyers online, where they draw from customers all over the country and in some cases from all over the world who are interested in their particular niche.
So once again, the small retailer is adapting and changing. They've found a way to survive and compete.
The only sector of the retail industry that is having sales gains during this current recession is the online retailers. It didn't take long for the small retailer to catch on.
"Store Closing Sale" might not be the sign of a small retailer in trouble. It could be the sign of one on the move - a move to the web.
But wait... they're not going out of business. They are simply changing their business model. Increasingly I am talking with small retailers who want to give up their brick and motar location and move to a "online only" operation.
The reasons - you can save a lot of money if you don't have to pay the high rent associated with good retail locations, you're open 24/7 but you only have to staff it when you like and your primary market area is no longer limited to the 2-5 mile radius around your store.
For specialty or niche retailers it's much easier to find large numbers of buyers online, where they draw from customers all over the country and in some cases from all over the world who are interested in their particular niche.
So once again, the small retailer is adapting and changing. They've found a way to survive and compete.
The only sector of the retail industry that is having sales gains during this current recession is the online retailers. It didn't take long for the small retailer to catch on.
"Store Closing Sale" might not be the sign of a small retailer in trouble. It could be the sign of one on the move - a move to the web.
Store Closing Sale & Lease Considerations
Sep/27/2009 06:16
I've
talked with hundreds of small retailers over the last
two years that are experiencing very drastic sales
losses. This has caused many of them to consider a
store closing sale or going out of business sale.
One of the first questions they ask is, “What about my lease”. My suggestion to them is to look at the fine print in their lease. With a little luck it will contain a clause that is relatively common in many retailer’s leases. It is the “co-tenancy clause”. It allows for tenants to demand cuts in rent or even penalty-free pullout if key tenants or a specific number of stores leave the mall or strip center.
The breach of a co-tenancy clause typically allows the retailer to pay as little as half of the rent while the landlord searches for a new tenant (it's now much tougher to find that new tenant) and if one is not found within the specified grace period, the retailer can break its lease without the usual cancellation fee.
Rent is among the largest expenses for a small retailer. As sales continue to decline, the fixed cost of rent eats away at the already thin profit margin or increases the losses that the small retailer is experiencing.
Bankruptcies of major national and regional retailers led to many mall and strip center vacancies. In 2008, at least 27 major retailers filed for bankruptcy protection. So far in the first half of 2009, another 13 have followed according to Bankruptcy.com.
The decision on what to do about their lease has always been a major concern for small retailers considering closing their store and running a going out of business sale. The abrupt increase in the number of national chains closing retail store fronts has made the enforcement of a co-tenancy clause a possible out for the small local retailer.
As always, when dealing with legal issues like leases, I always recommend that you consult with a lawyer.
One of the first questions they ask is, “What about my lease”. My suggestion to them is to look at the fine print in their lease. With a little luck it will contain a clause that is relatively common in many retailer’s leases. It is the “co-tenancy clause”. It allows for tenants to demand cuts in rent or even penalty-free pullout if key tenants or a specific number of stores leave the mall or strip center.
The breach of a co-tenancy clause typically allows the retailer to pay as little as half of the rent while the landlord searches for a new tenant (it's now much tougher to find that new tenant) and if one is not found within the specified grace period, the retailer can break its lease without the usual cancellation fee.
Rent is among the largest expenses for a small retailer. As sales continue to decline, the fixed cost of rent eats away at the already thin profit margin or increases the losses that the small retailer is experiencing.
Bankruptcies of major national and regional retailers led to many mall and strip center vacancies. In 2008, at least 27 major retailers filed for bankruptcy protection. So far in the first half of 2009, another 13 have followed according to Bankruptcy.com.
The decision on what to do about their lease has always been a major concern for small retailers considering closing their store and running a going out of business sale. The abrupt increase in the number of national chains closing retail store fronts has made the enforcement of a co-tenancy clause a possible out for the small local retailer.
As always, when dealing with legal issues like leases, I always recommend that you consult with a lawyer.
A Bad Recipe For A Hot Dog Stand
Sep/24/2009 05:39
There
was a litttle old man who ran a hot dog stand in the
financial district in Chicago. He did really well
selling his hot dogs. One day, a customer that worked
in the district mentioned, while adding mustard to
his hot dog, that he felt there was an economic
downturn looming. The hot dog stand owner decided
he’d better prepare for the worst so he immediately
fired his helper, switched to lower quality hot dog
and stopped advertising. Sure enough, business
dropped off and he finally had to close down. “It’s a
good thing I was prepared,” said the hot dog stand
owner, as he signed his bankruptcy documents.
The fact is, that when times become tough, the first thing many business owners do is stop marketing, buy cheaper products and lay off staff. This most likely means there will be fewer customers coming in and fewer people to serve the ones that do show up—a good recipe for disaster
The fact is, that when times become tough, the first thing many business owners do is stop marketing, buy cheaper products and lay off staff. This most likely means there will be fewer customers coming in and fewer people to serve the ones that do show up—a good recipe for disaster
Does Your Store Closing Sale Smell Like Dead Fish?
Sep/23/2009 06:16
In
Seth Godin’s blog (http://sethgodin.typepad.com/) on
July 22nd he posted “Death Spiral”. In it he tells
the following “Fish Monger” story…
“You've probably seen it. The fish monger sees a decline in business, so they have less money to spend on upkeep and inventory, so they keep the fish a bit longer and don't clean up as often, so of course, business declines and then they have even less money... Eventually, you have an empty, smelly fish store that's out of business.”
The story is oh so true, even for the small retailer that has decided that now is the right time to have a store closing sale or going out of business sale.
Your retail business should be operated up until the week of the start of your store closing sale as if it was going to be in business forever. Your inventory quality and quantity should be maintained. The idea that you should sell down your inventory prior to running a going out of business sale is a bad idea. Your inventory should not become depleted. You should maintain a good stock of your fast moving items. If anything you want to be a little overstocked in these products. If inventory is trimmed in any area it should be the out-of-season, slow moving items.
When you begin your store closing sale your store should look full and fresh (limit the stinky fish and get it sold early). This will result in increased traffic, smaller discounts and more money in your pocket at the end of the sale.
“You've probably seen it. The fish monger sees a decline in business, so they have less money to spend on upkeep and inventory, so they keep the fish a bit longer and don't clean up as often, so of course, business declines and then they have even less money... Eventually, you have an empty, smelly fish store that's out of business.”
The story is oh so true, even for the small retailer that has decided that now is the right time to have a store closing sale or going out of business sale.
Your retail business should be operated up until the week of the start of your store closing sale as if it was going to be in business forever. Your inventory quality and quantity should be maintained. The idea that you should sell down your inventory prior to running a going out of business sale is a bad idea. Your inventory should not become depleted. You should maintain a good stock of your fast moving items. If anything you want to be a little overstocked in these products. If inventory is trimmed in any area it should be the out-of-season, slow moving items.
When you begin your store closing sale your store should look full and fresh (limit the stinky fish and get it sold early). This will result in increased traffic, smaller discounts and more money in your pocket at the end of the sale.
The 4th Quarter - The Best Time To Close Your Store
Sep/22/2009 09:59
The
last three months of the year is the best time to
conduct your store closing sale if your goal is to
maximize your return on investment. This is
especially true this year with the current recession.
The last three months of the year provide the highest
volume and profitability for the vast majority of
retailers. This makes the last quarter the best time
to conduct your Store Closing Sale. Here's why:
• The holiday season is the best time of the year for most retailers. A Store Closing Sale is the fastest and safest way to sell a store for the highest possible cash price.
• A Closing Sale during the last quarter allows your inventory to be sold out at the highest possible profit margins, in the shortest period of time, with the lowest advertising and other expenses, thus maximizing your return.
• All sales are cash, and your cash flow becomes positive almost immediately.
• Consumers always spend more for the holidays and are more likely to shop a well-planned and advertised Store Closing Sale. Price conscious consumers are more attracted to these sales than ever before.
• The holiday season is the best time of the year for most retailers. A Store Closing Sale is the fastest and safest way to sell a store for the highest possible cash price.
• A Closing Sale during the last quarter allows your inventory to be sold out at the highest possible profit margins, in the shortest period of time, with the lowest advertising and other expenses, thus maximizing your return.
• All sales are cash, and your cash flow becomes positive almost immediately.
• Consumers always spend more for the holidays and are more likely to shop a well-planned and advertised Store Closing Sale. Price conscious consumers are more attracted to these sales than ever before.
How do you value your business when it's time to sell
Jun/19/2009 13:02
I
often get ask, "How much should I ask for my
business". In today's market that's not an easy
question to answer. Then again- it never has been.
Most people buy a business based on it's ability to
make a profit. Using that premise, the following
guidelines are a good starting place,
• An extremely well-established and steady business with a solid market position and whose earnings will not be dependent on a strong management team should be valued at eight to ten times current profits.
• An established business with good market position, with some competition and requiring continual management attention should be valued at five to seven times current profits.
• An established business with no significant competitive advantage, lots of competition and heavy dependency upon management skills should be valued at two to four times current profits.
• A small business where the current owner is the manager and sole decision maker should be valued at one times the current profit.
Most small retail businesses fall under the last category. They will always be better off running a Store Closing Sale and liquidating their inventory, fixtures and equipment.
• An extremely well-established and steady business with a solid market position and whose earnings will not be dependent on a strong management team should be valued at eight to ten times current profits.
• An established business with good market position, with some competition and requiring continual management attention should be valued at five to seven times current profits.
• An established business with no significant competitive advantage, lots of competition and heavy dependency upon management skills should be valued at two to four times current profits.
• A small business where the current owner is the manager and sole decision maker should be valued at one times the current profit.
Most small retail businesses fall under the last category. They will always be better off running a Store Closing Sale and liquidating their inventory, fixtures and equipment.
Be Aware of What's Going On Around You
Jun/11/2009 13:15
The
Mall Problem!
A recent article in the Wall Street Journal had a frightening front-page headline: “Recession Turns Malls Into Ghost Towns.” The article chronicles the serious problems facing a growing number of the nation’s malls.
The loss of one or more anchor stores is usually what triggers this situation in many of these malls. With stagnant sales and so many retailers struggling, it is logical that malls and shopping centers would be negatively impacted. If you’re a retailer with stores in malls, pay absolute attention to what’s happening around you. You do not want to be left standing while other stores around yours close up, go out of business, or move.
When the economy was good, some malls were able to reinvent themselves and survive. In this economy, it is highly unlikely a mall will be able to get the financing needed to remodel and rebound from anchor closings and the failing of other stores in the mall.
The Wall Street Journal article dated May 22, 2009 can be found online at http://online.wsj.com/article/SB124294047987244803.html.
A recent article in the Wall Street Journal had a frightening front-page headline: “Recession Turns Malls Into Ghost Towns.” The article chronicles the serious problems facing a growing number of the nation’s malls.
The loss of one or more anchor stores is usually what triggers this situation in many of these malls. With stagnant sales and so many retailers struggling, it is logical that malls and shopping centers would be negatively impacted. If you’re a retailer with stores in malls, pay absolute attention to what’s happening around you. You do not want to be left standing while other stores around yours close up, go out of business, or move.
When the economy was good, some malls were able to reinvent themselves and survive. In this economy, it is highly unlikely a mall will be able to get the financing needed to remodel and rebound from anchor closings and the failing of other stores in the mall.
The Wall Street Journal article dated May 22, 2009 can be found online at http://online.wsj.com/article/SB124294047987244803.html.
Should You Run Your Own Store Closing Sale?
Jun/03/2009 09:11
The decision to conduct a Store Closing Sale or Going
Out Of Business Sale is the toughest decision that
any small retailer might have to make. The emotional
attachment that the owner has is usually the largest
hurdle that must be over come. Most small retail
store owners have never been involved in a Store
Closing or Going Out Of Business total liquidation
sale. They don't
have a clue where to start. Should they try it
themselves or hire a profession to maximize the going
out of business sale?
Here are some questions that the store owner may have:
• How much should you mark down items?
Mark down too much and you lose a lmoney. Don't mark down enough and have your quitting business sale stall.
• How do you advertise this sale, especially the beginning of the sale?
The key is to use a media that will generate a traffic frenzy and drive enough traffic into the store to sell the best items at the highest gross possible.
• How long will it take to prepare for the Store Closing Sale?
The store must be closed for a number of days to prepare and organize for the sale. Too many days closed results in lost revenue and too few leads to lack of preparation and planning and a possible disaster on opening day of the Going Out of Business Sale.
• What is the best way to sell fixtures and store equipment and supplies?
Selling used fixtures and equipment can be confusing. You need to maximize your return. Everything has value.
• How many and what kind of signs do you need?
It is common 20-25% of the traffic of the quitting business sale to come from eye catching window signs & banners.
• How long will it take to liquidate most of the inventory?
The key is to liquidate as quickly as possible while maximizing the return. This result in lower expenses while closing your business
• Should you hire a retail consultant to help you plan and implement the Store Closing or Going Out of Business Sale?
A store-closing expert can really help an owner to get through this difficult period. They have experience planning and implementing this kind of sale and even after the additional expense most store owners will be better off financially than doing it themselves.
Here are some questions that the store owner may have:
• How much should you mark down items?
Mark down too much and you lose a lmoney. Don't mark down enough and have your quitting business sale stall.
• How do you advertise this sale, especially the beginning of the sale?
The key is to use a media that will generate a traffic frenzy and drive enough traffic into the store to sell the best items at the highest gross possible.
• How long will it take to prepare for the Store Closing Sale?
The store must be closed for a number of days to prepare and organize for the sale. Too many days closed results in lost revenue and too few leads to lack of preparation and planning and a possible disaster on opening day of the Going Out of Business Sale.
• What is the best way to sell fixtures and store equipment and supplies?
Selling used fixtures and equipment can be confusing. You need to maximize your return. Everything has value.
• How many and what kind of signs do you need?
It is common 20-25% of the traffic of the quitting business sale to come from eye catching window signs & banners.
• How long will it take to liquidate most of the inventory?
The key is to liquidate as quickly as possible while maximizing the return. This result in lower expenses while closing your business
• Should you hire a retail consultant to help you plan and implement the Store Closing or Going Out of Business Sale?
A store-closing expert can really help an owner to get through this difficult period. They have experience planning and implementing this kind of sale and even after the additional expense most store owners will be better off financially than doing it themselves.
Improve Your Direct Mail Letter Response
May/30/2009 09:15
Tips On Writing A Store Closing Sales Letter
To be successful with direct mail when running a store closing sale or going out of business sale here are some tips that will increase your response rate:
• At the top of your letter use a powerful headline that shouts the most important benefit you offer. You should always use a larger font size for your headline than you use for the body of your letter and it should be bold.
• Use a friendly conversational style when writing your letter. Don’t make it too corporate by trying to impress your prospects with your command of the English language and large words. You’ll turn them off if you do and they won’t respond well to your message.
• Always use a “P.S.” in your letter to restate your strongest benefit and offer. Most people read a “P.S.” first before the body of the letter.
• Your letter must focus on the benefits to your potential customer. Everyone cares about one thing – “What’s in it for me”. You need to tell them.
• Ask your prospect to take immediate action such as come to your store, complete a entry card, call you. If you don’t ask them to take action, they won’t.
• Set a time-frame on how quickly they need to take action to receive the benefit. Open-ended offers seldom generate responses.
• Never use mailing labels on your envelops. Mailing labels scream “junk mail”. Use a mailing label and your letter goes to the circular file right away.
The national average direct mail response rate is only 1%. What that means is that if you send out 100 letters, the average response rate is one customer for each 100 letters you mail. The more targeted your mailing list the better the response rate. Mailing to your existing customer list will dramatically improve that response rate.
To be successful with direct mail when running a store closing sale or going out of business sale here are some tips that will increase your response rate:
• At the top of your letter use a powerful headline that shouts the most important benefit you offer. You should always use a larger font size for your headline than you use for the body of your letter and it should be bold.
• Use a friendly conversational style when writing your letter. Don’t make it too corporate by trying to impress your prospects with your command of the English language and large words. You’ll turn them off if you do and they won’t respond well to your message.
• Always use a “P.S.” in your letter to restate your strongest benefit and offer. Most people read a “P.S.” first before the body of the letter.
• Your letter must focus on the benefits to your potential customer. Everyone cares about one thing – “What’s in it for me”. You need to tell them.
• Ask your prospect to take immediate action such as come to your store, complete a entry card, call you. If you don’t ask them to take action, they won’t.
• Set a time-frame on how quickly they need to take action to receive the benefit. Open-ended offers seldom generate responses.
• Never use mailing labels on your envelops. Mailing labels scream “junk mail”. Use a mailing label and your letter goes to the circular file right away.
The national average direct mail response rate is only 1%. What that means is that if you send out 100 letters, the average response rate is one customer for each 100 letters you mail. The more targeted your mailing list the better the response rate. Mailing to your existing customer list will dramatically improve that response rate.
Is A Store Closing Sale Effective in This Retail Market?
May/21/2009 13:30
Is
a
“Store Closing Sale” effective
in today’s retail market?
There isn’t a week that goes by that there isn’t a new Store Closing Sale starting somewhere in each major market. The shear number of retail stores that will close in 2009 almost boggles the mind. According to some retail industry experts the number could be as high as 200,000.
With that many retailers going out of business, one has to ask if running a Store Closing Sale is still an effective way to exit a retail business. The answer is a definite - “Yes” – but it must be well-planned and well-marketed.
A well-planned and implemented Store Closing Sale will still result in sales equal to 100% – 115% of the value of your inventory, plus the local market value of your fixtures and equipment.
You will not get the results you need if you just put up some signs and run an ad in the local newspaper. You must have a plan that:
• sets a defined time frame for the sale
• provides a pricing strategy to maximizes your margins
• uses the most effective marketing tools
• creates the “sales environment”
• keeps your customers involved with the sale
• also sells your store fixtures, displays & equipment
Many retailers are hesitant to seek the expert help they need to maximize their return on the money, time, and emotions that they have invested in building their retail business.
If you are planning on conducting a Store Closing Sale, use a retail store- closing consultant to help you. Make sure that you talk to more than one and choose the one that you feel most comfortable with. Using the right store-closing expert to help you will really not cost you – it will make money for you.
You only close your store once. Do it right and you maximize your return. Make one mistake and it can cost you big bucks.
A well-planned Store Closing Sale is still the best means to exit your retail business even when faced with what seems to be an never ending number of Store Closing Sale ads in most markets. BUT YOU HAVE TO DO IT RIGHT.
There isn’t a week that goes by that there isn’t a new Store Closing Sale starting somewhere in each major market. The shear number of retail stores that will close in 2009 almost boggles the mind. According to some retail industry experts the number could be as high as 200,000.
With that many retailers going out of business, one has to ask if running a Store Closing Sale is still an effective way to exit a retail business. The answer is a definite - “Yes” – but it must be well-planned and well-marketed.
A well-planned and implemented Store Closing Sale will still result in sales equal to 100% – 115% of the value of your inventory, plus the local market value of your fixtures and equipment.
You will not get the results you need if you just put up some signs and run an ad in the local newspaper. You must have a plan that:
• sets a defined time frame for the sale
• provides a pricing strategy to maximizes your margins
• uses the most effective marketing tools
• creates the “sales environment”
• keeps your customers involved with the sale
• also sells your store fixtures, displays & equipment
Many retailers are hesitant to seek the expert help they need to maximize their return on the money, time, and emotions that they have invested in building their retail business.
If you are planning on conducting a Store Closing Sale, use a retail store- closing consultant to help you. Make sure that you talk to more than one and choose the one that you feel most comfortable with. Using the right store-closing expert to help you will really not cost you – it will make money for you.
You only close your store once. Do it right and you maximize your return. Make one mistake and it can cost you big bucks.
A well-planned Store Closing Sale is still the best means to exit your retail business even when faced with what seems to be an never ending number of Store Closing Sale ads in most markets. BUT YOU HAVE TO DO IT RIGHT.
Is Opportunity Knocking On Your Doo
May/06/2009 13:24
Improve
Cash Flow & Reduce, Eliminate
or Restructure Your Debt
Every business, large or small, can run into problems beyond their control. The recession, increased competition, a lawsuit, ever increasing expenses, a natural disaster, a medical illness and many other unanticipated problems can cause debt payments to fall behind and put you on the road to financial crisis.
"Profit cures a lot of ills, but cash flow pays the bills"
Cash Flow or lack of it is the # 1 reason retailers wind-up closing their store. If you feel you might have started down that road to financial crisis, here are some important points to consider:
Don't Wait. The sooner you can gain control of the financial situation the better off you will be. Stop the phone calls, collection letters, attorney fees, lawsuits, liens and other unpleasant results of past due balances. A qualified debt management consultant can stop this interference with your normal business functions very quickly and can begin the process of reducing the impact of the problem
Don't Do It Alone. Problems that you have in the normal course of business are the problems you are best equipped to handle. A financial crisis and the emotional upheaval that normally accompanies such a crisis make it very difficult to address these problems without help. A third party negotiator is more likely to obtain the desired results. A professional knows what offer is most likely to be approved based upon a careful analysis of the financial situation and the cost of other alternatives to a negotiated agreement
.
Bankruptcy. Companies with excessive debt often consider bankruptcy. However, bankruptcy should only be considered as a last resort. It can be detrimental to your credit for years to come, it is extremely expensive and it substantially reduces the flexibility to manage your own finances. Bankruptcy is generally not good for either you or your creditors.
Your Credit Rating. Credit is essential to the functioning of most retailers. A professional negotiator will always act to protect your credit rating and will do so by obtaining a full release with any settlement. Most creditors will even resume the business relationship after the settlement is made.
Get Control of Your Debt & Increase Cash Flow
Solutions for Retailers works with a number of other professionals to help our clients.
A Debt and Payables Management Professional is one that our clients have found to be very useful. If you need help finding a reputable Debt and Payables Management Professional give us a call at 520-225-0107 and we will put you in touch with one that our clients have used and have been extremely happy with the results.
or Restructure Your Debt
Every business, large or small, can run into problems beyond their control. The recession, increased competition, a lawsuit, ever increasing expenses, a natural disaster, a medical illness and many other unanticipated problems can cause debt payments to fall behind and put you on the road to financial crisis.
"Profit cures a lot of ills, but cash flow pays the bills"
Cash Flow or lack of it is the # 1 reason retailers wind-up closing their store. If you feel you might have started down that road to financial crisis, here are some important points to consider:
Don't Wait. The sooner you can gain control of the financial situation the better off you will be. Stop the phone calls, collection letters, attorney fees, lawsuits, liens and other unpleasant results of past due balances. A qualified debt management consultant can stop this interference with your normal business functions very quickly and can begin the process of reducing the impact of the problem
Don't Do It Alone. Problems that you have in the normal course of business are the problems you are best equipped to handle. A financial crisis and the emotional upheaval that normally accompanies such a crisis make it very difficult to address these problems without help. A third party negotiator is more likely to obtain the desired results. A professional knows what offer is most likely to be approved based upon a careful analysis of the financial situation and the cost of other alternatives to a negotiated agreement
.
Bankruptcy. Companies with excessive debt often consider bankruptcy. However, bankruptcy should only be considered as a last resort. It can be detrimental to your credit for years to come, it is extremely expensive and it substantially reduces the flexibility to manage your own finances. Bankruptcy is generally not good for either you or your creditors.
Your Credit Rating. Credit is essential to the functioning of most retailers. A professional negotiator will always act to protect your credit rating and will do so by obtaining a full release with any settlement. Most creditors will even resume the business relationship after the settlement is made.
Get Control of Your Debt & Increase Cash Flow
Solutions for Retailers works with a number of other professionals to help our clients.
A Debt and Payables Management Professional is one that our clients have found to be very useful. If you need help finding a reputable Debt and Payables Management Professional give us a call at 520-225-0107 and we will put you in touch with one that our clients have used and have been extremely happy with the results.
Use Email During Your Store Closing Sale to Control Marketing Cost.
Apr/09/2009 09:13
Use Email During Your Store Closing Sale to Control
Marketing Cost.
Most retailers understand the 80 – 20 rule: You do 80% of your business with 20% of your customers. That is not going to change during your Store Closing Sale. It is extremely important that you take advantage of your existing relationship with your customers to maximize your results from your Store Closing Sale.
Direct marketing is the most productive tool that you have when conducting a Store Closing Sale. Direct Mail is an important marketing tool, but “snail mail” is slower, more costly and less flexible than Email. The biggest advantages of Email over “snail mail” are cost, quickness of delivery and frequency. The largest single disadvantage is that it must be “permission based”.
You can send a letter or postcard to anyone you choose, but to send Emails the recipient must “subscribe” or agree to receive your Emails. It is extremely important that you build your customer Email subscriber list before and during your Store Closing Sale. You can do this through “prize drawings”, were the entry provides their Email address and agrees to receive special Email offers and information about the sale or simply by asking each customer if they would be interested in receiving future special offers and information about the sale via Email.
Email is: fast, efficient, measurable, personal, low cost and has high return.
Because of its low cost, Emails can be sent with the frequency needed to make an impact. It’s possible to reach a customer 3 to 5 times for the same cost of one postcard that you print and send via snail mail.
An Email marketing campaign must include the same elements of any traditional promotional campaign: create an impact, make an effective offer, provide a call to action and have a tool to measure its results.
Most retailers understand the 80 – 20 rule: You do 80% of your business with 20% of your customers. That is not going to change during your Store Closing Sale. It is extremely important that you take advantage of your existing relationship with your customers to maximize your results from your Store Closing Sale.
Direct marketing is the most productive tool that you have when conducting a Store Closing Sale. Direct Mail is an important marketing tool, but “snail mail” is slower, more costly and less flexible than Email. The biggest advantages of Email over “snail mail” are cost, quickness of delivery and frequency. The largest single disadvantage is that it must be “permission based”.
You can send a letter or postcard to anyone you choose, but to send Emails the recipient must “subscribe” or agree to receive your Emails. It is extremely important that you build your customer Email subscriber list before and during your Store Closing Sale. You can do this through “prize drawings”, were the entry provides their Email address and agrees to receive special Email offers and information about the sale or simply by asking each customer if they would be interested in receiving future special offers and information about the sale via Email.
Email is: fast, efficient, measurable, personal, low cost and has high return.
Because of its low cost, Emails can be sent with the frequency needed to make an impact. It’s possible to reach a customer 3 to 5 times for the same cost of one postcard that you print and send via snail mail.
An Email marketing campaign must include the same elements of any traditional promotional campaign: create an impact, make an effective offer, provide a call to action and have a tool to measure its results.
A "Prize Drawing" Builds Customer List
Apr/04/2009 08:02
Using a Contest or Prize Drawing during a Store
Closing Sale
Direct Marketing has proven to be the most productive marketing tool for most of my client’s Store Closing Sales. For direct marketing to be effective you must have a good mailing list. A customer contest or prize drawing is a good tool to help you build a large and current mailing list.
Some store closing consulting companies use complex and sometimes confusing customer contest to help build that list and to motivate customers to come back to the store multiple times during the Store Closing Sale. It has been my experience that in many cases the effort and money spent on running the contest far out weigh the benefits. Many times less than a handful of people actually are active in the contest. Most names are captured during the first week of the Store Closing Sale and the same results can be obtained with a “prize drawing” .
The prize drawing does not require the same maintenance that a full blown contest does.
The information that you should capture is customer’s name, address, telephone number and email address. This information will allow you to market to the customer multiple times during your Store Closing Sale. Email has proven to be a very cost effective means to reach a customer. You should use a combination of email and direct mail to reach these people through out the sale. Make sure that each contact makes a new offer or provides new information that requires immediate action on their part for them to benefit.
The prize must be significant enough for the customer to take time to enter. Many times I include an entry card with the initial mailing that must be returned to the store in order to participate. Always have entry cards available at your store during the Store Closing Sale for customers to complete. You should not require a purchase to enter the drawing. The date of the drawing should be set toward the end of the sale. Always include information about the drawing and prize in each marketing piece.
Remember, your goal in using a drawing is to build a large and current mail and email list. But, it doesn’t hurt to build some goodwill along the way. Calling the drawing a “Customer Appreciation Drawing” is a good way to accomplish that.
Direct Marketing has proven to be the most productive marketing tool for most of my client’s Store Closing Sales. For direct marketing to be effective you must have a good mailing list. A customer contest or prize drawing is a good tool to help you build a large and current mailing list.
Some store closing consulting companies use complex and sometimes confusing customer contest to help build that list and to motivate customers to come back to the store multiple times during the Store Closing Sale. It has been my experience that in many cases the effort and money spent on running the contest far out weigh the benefits. Many times less than a handful of people actually are active in the contest. Most names are captured during the first week of the Store Closing Sale and the same results can be obtained with a “prize drawing” .
The prize drawing does not require the same maintenance that a full blown contest does.
The information that you should capture is customer’s name, address, telephone number and email address. This information will allow you to market to the customer multiple times during your Store Closing Sale. Email has proven to be a very cost effective means to reach a customer. You should use a combination of email and direct mail to reach these people through out the sale. Make sure that each contact makes a new offer or provides new information that requires immediate action on their part for them to benefit.
The prize must be significant enough for the customer to take time to enter. Many times I include an entry card with the initial mailing that must be returned to the store in order to participate. Always have entry cards available at your store during the Store Closing Sale for customers to complete. You should not require a purchase to enter the drawing. The date of the drawing should be set toward the end of the sale. Always include information about the drawing and prize in each marketing piece.
Remember, your goal in using a drawing is to build a large and current mail and email list. But, it doesn’t hurt to build some goodwill along the way. Calling the drawing a “Customer Appreciation Drawing” is a good way to accomplish that.
Direct Mail - a key tool for promoting a Store Closing Sale
Mar/24/2009 14:32
Direct
Mail – A key tool for promoting a Store Closing Sale.
Direct mail is usually the most cost effective way for most small retailers to promote their Store Closing Sale. There are two key elements to any direct mail campaign, the mail list and the collateral or piece being mailed.
Mail List – your customer mailing list is always the best list to use. It is not unusual to get up to a 10% response rate when mailing to a current and well maintained customer list when promoting a Store Closing Sale.
If you have failed to maintain an up to date customer mailing list, your next best option is to purchase a targeted mailing list from a mail list broker. You select the “target” – age, sex, income, home value or special interest. If you own a golf store, you want to target golfers. If you own a high fashion boutique, you would target female, upper income and age of your typical customer. A well targeted list will typically generate a 2% - 3% response rate.
The next option is to do a saturation mailing announcing the Store Closing Sale to those homes in your immediate marketing area. The need to reach everyone outweighs the need to be more targeted, i.e., you don't care about demographics such as income, home value, children and age in a given area or neighborhood. The more general your merchandise the better response you’ll get. A 1% response rate when doing a saturation mailing is common.
Mail Piece – there are many choices when choosing a mail piece. The two that I have found to be most effective are a letter from you to your customer or an oversized postcard with a strong image and message on the front.
When using your own customer mailing list, always send a personal letter from you to your customer inviting them to the kick-off of the Store Closing Sale and giving them a brief reason why you are closing and thanking them for their past support. You have a relationship to build on with these individuals. Always make sure your store’s name is on the outside of the envelops.
When mailing to a targeted or saturation mailing list, I’ve found oversize postcards to be very effective when they have a strong message and interesting image on the front. You don’t need to worry about the piece being opened. If designed well, the postcard will always be turned over and read.
If your customer list is not large enough to generate the traffic you need, you can use a combination of your list and a target or saturation list. That initial mailing could also be a combination of letters and postcards. This mailing is key to the success of your sale. Make sure your mailing is large enough to generate the traffic and sales results you need.
Direct mail is usually the most cost effective way for most small retailers to promote their Store Closing Sale. There are two key elements to any direct mail campaign, the mail list and the collateral or piece being mailed.
Mail List – your customer mailing list is always the best list to use. It is not unusual to get up to a 10% response rate when mailing to a current and well maintained customer list when promoting a Store Closing Sale.
If you have failed to maintain an up to date customer mailing list, your next best option is to purchase a targeted mailing list from a mail list broker. You select the “target” – age, sex, income, home value or special interest. If you own a golf store, you want to target golfers. If you own a high fashion boutique, you would target female, upper income and age of your typical customer. A well targeted list will typically generate a 2% - 3% response rate.
The next option is to do a saturation mailing announcing the Store Closing Sale to those homes in your immediate marketing area. The need to reach everyone outweighs the need to be more targeted, i.e., you don't care about demographics such as income, home value, children and age in a given area or neighborhood. The more general your merchandise the better response you’ll get. A 1% response rate when doing a saturation mailing is common.
Mail Piece – there are many choices when choosing a mail piece. The two that I have found to be most effective are a letter from you to your customer or an oversized postcard with a strong image and message on the front.
When using your own customer mailing list, always send a personal letter from you to your customer inviting them to the kick-off of the Store Closing Sale and giving them a brief reason why you are closing and thanking them for their past support. You have a relationship to build on with these individuals. Always make sure your store’s name is on the outside of the envelops.
When mailing to a targeted or saturation mailing list, I’ve found oversize postcards to be very effective when they have a strong message and interesting image on the front. You don’t need to worry about the piece being opened. If designed well, the postcard will always be turned over and read.
If your customer list is not large enough to generate the traffic you need, you can use a combination of your list and a target or saturation list. That initial mailing could also be a combination of letters and postcards. This mailing is key to the success of your sale. Make sure your mailing is large enough to generate the traffic and sales results you need.
Using Exterior Signs for Store Closing Sale
Mar/18/2009 13:14
Use
of Signs for Store Closing Sale
Signs can be one of the most effective marketing tools you can use when conducting a Store Closing Sale.
Exterior Signs:
The use of professional looking signs used on the exterior of the store should shout that you are closing your store. They should “shout” that message loud and clear. The types of signs most often used are: banners, window signs, A-frame or sidewalk signs, yard signs, and “sign walker” signs.
I recommend that you put the signs up a couple of days prior to the start of the sale. They act as a billboard to announce the coming event. Exterior signs, even though temporary, are often regulated by city sign ordinances. Each city has its own rules and fees. You are probably well aware of them if you have been in business for any length of time. When it comes to dealing with the city or in some cases your landlord, I’m a firm believer that it is a lot easier to ask for forgiveness after the fact than it is to get permission before putting up your signs.
Banners: You should use as large of banner as possible and in most cases hang that banner in the highest and most visible location on your building. Use colors that stand-out and are easy to read. A professional sign maker can provide guidance on which color combinations work best. I tend to use yellow/black, red/white, red/yellow or purple/gold combinations because many times these are available off the shelf or are colors that the sign makers carry in stock.
Window Signs: Window signs should also be as large as possible. They should provide information on the reason for the sale if possible – “Sale”, “Store Closing”, “Going-out-of-Business”. “Moving Sale”, “Retirement Sale”, “Everything Must Go” are all messages that can be used in your windows.
A-Frame/Sidewalk Signs: Many of you have these type sign holders that you take out each day and bring back in at the close of business. It is often possible to change the message periodically.
Yard Signs: Yard signs announcing the sale can be used at entrances to your parking lot or along access streets to your location. You want to announce your sale to as many people driving or walking by as possible. It is important that these signs be weather resistant.
Sign Walker Signs: The use of sign walker signs seems to be increasing. These signs are held by individuals, are bright and easy to read and are only there during high traffic count periods. I caution you that you need to be particular about who is holding your signs and promoting your sale. Often times these sign holders are in costume to attract attention and make the sign more noticeable.
You should attempt to make sure that all of your exterior signs are coordinated and look professional. Good use of exterior signs can improve your customer traffic by 15% or more.
There are many effective Store Closing sign kits available from retail sales promotion supplies/fixture companies. Many times I use these kits along with a few custom made signs to make sure that the exterior signs are communicating a strong marketing message that drives customers into the sale.
Signs can be one of the most effective marketing tools you can use when conducting a Store Closing Sale.
Exterior Signs:
The use of professional looking signs used on the exterior of the store should shout that you are closing your store. They should “shout” that message loud and clear. The types of signs most often used are: banners, window signs, A-frame or sidewalk signs, yard signs, and “sign walker” signs.
I recommend that you put the signs up a couple of days prior to the start of the sale. They act as a billboard to announce the coming event. Exterior signs, even though temporary, are often regulated by city sign ordinances. Each city has its own rules and fees. You are probably well aware of them if you have been in business for any length of time. When it comes to dealing with the city or in some cases your landlord, I’m a firm believer that it is a lot easier to ask for forgiveness after the fact than it is to get permission before putting up your signs.
Banners: You should use as large of banner as possible and in most cases hang that banner in the highest and most visible location on your building. Use colors that stand-out and are easy to read. A professional sign maker can provide guidance on which color combinations work best. I tend to use yellow/black, red/white, red/yellow or purple/gold combinations because many times these are available off the shelf or are colors that the sign makers carry in stock.
Window Signs: Window signs should also be as large as possible. They should provide information on the reason for the sale if possible – “Sale”, “Store Closing”, “Going-out-of-Business”. “Moving Sale”, “Retirement Sale”, “Everything Must Go” are all messages that can be used in your windows.
A-Frame/Sidewalk Signs: Many of you have these type sign holders that you take out each day and bring back in at the close of business. It is often possible to change the message periodically.
Yard Signs: Yard signs announcing the sale can be used at entrances to your parking lot or along access streets to your location. You want to announce your sale to as many people driving or walking by as possible. It is important that these signs be weather resistant.
Sign Walker Signs: The use of sign walker signs seems to be increasing. These signs are held by individuals, are bright and easy to read and are only there during high traffic count periods. I caution you that you need to be particular about who is holding your signs and promoting your sale. Often times these sign holders are in costume to attract attention and make the sign more noticeable.
You should attempt to make sure that all of your exterior signs are coordinated and look professional. Good use of exterior signs can improve your customer traffic by 15% or more.
There are many effective Store Closing sign kits available from retail sales promotion supplies/fixture companies. Many times I use these kits along with a few custom made signs to make sure that the exterior signs are communicating a strong marketing message that drives customers into the sale.
Marketing Tools for A Store Closing Sale
Mar/09/2009 15:51
Marketing Your Store Closing Sale for small
retailers.
You have just made the decision that it’s time to close your retail business. In most cases some of the primary reasons you have made that decision is that business is declining, your customer count is way down and your advertising is not working. So, how are you going to sell your entire inventory and fixtures in just 60 to 90 days.
You need to have a concise, well thought out marketing plan that is not only going to get them in the door the first time, but keep them coming back throughout the sale. And you have to do it as inexpensively as possible. Most Store Closing Sales require a budget of 6% - 8% of estimated sales
Below are some of the marketing tools that I use when developing an effective marketing plan for my clients that have decided to run a Store Closing Sale.
Exterior Sale Signs – often creates more traffic than any other means, depending on location
Direct Mail – letters or postcards, used for initial and follow-up marketing
Prize Drawing or Contest – incentive to come in initially/captures contact information for follow-up marketing
Email Marketing – least expensive way to reach your customer
Web site marketing/pay per click campaign – can be target at local market
Newspaper Ads– weekly paper that covers primarily local news usually produces best results
Press Releases – the best free advertising you can get
During the next several weeks I will cover each of these tools in a separate blog. The balance & timing of using these tools vary by each stores unique situation and not every tool is used for every sale. If you want to discuss your situation – call Solutions For Retailers at 888-908-9449
You have just made the decision that it’s time to close your retail business. In most cases some of the primary reasons you have made that decision is that business is declining, your customer count is way down and your advertising is not working. So, how are you going to sell your entire inventory and fixtures in just 60 to 90 days.
You need to have a concise, well thought out marketing plan that is not only going to get them in the door the first time, but keep them coming back throughout the sale. And you have to do it as inexpensively as possible. Most Store Closing Sales require a budget of 6% - 8% of estimated sales
Below are some of the marketing tools that I use when developing an effective marketing plan for my clients that have decided to run a Store Closing Sale.
Exterior Sale Signs – often creates more traffic than any other means, depending on location
Direct Mail – letters or postcards, used for initial and follow-up marketing
Prize Drawing or Contest – incentive to come in initially/captures contact information for follow-up marketing
Email Marketing – least expensive way to reach your customer
Web site marketing/pay per click campaign – can be target at local market
Newspaper Ads– weekly paper that covers primarily local news usually produces best results
Press Releases – the best free advertising you can get
During the next several weeks I will cover each of these tools in a separate blog. The balance & timing of using these tools vary by each stores unique situation and not every tool is used for every sale. If you want to discuss your situation – call Solutions For Retailers at 888-908-9449
Do you have a retail business or just an expensive hobby
Feb/28/2009 08:56
Do you have a business or just an Expensive hobby?
Times have never been tougher for the small retailer. For most, sales are down, customers are buying less, everyone wants a discount and expenses keep growing.
According to all the “experts” things really aren’t going to get any better until 2010.
Below are ten trends that are popping-up for most small retailers that I’ve talked with since the first of the year
• Sales are declining
• Customer traffic is down
• Old or discontinued inventory is growing
• Cash flow is a problem
• Bank, vendor or credit card debt is increasing or past due
• Investing personal funds to cover normal operating expenses
• Profit is declining or non-exisitent..
• Stress created by the business is affecting personal & family life
• Considering getting out of retail
• Not having fun anymore
Now is the time to make some important decisions. Don’t put them off. You need to know if you still have a viable business or just an expensive hobby. You need some expert advice. Talk to your accountant first.
If your retail business is no longer a source of income – you have a hobby, a serious hobby – but a hobby. If you are in a financial position to afford that hobby, that’s great. But if you are like most retailers I know, you’re in business to make money.
If you now have a “hobby” you can’t afford – you need some more expert advice.
Times have never been tougher for the small retailer. For most, sales are down, customers are buying less, everyone wants a discount and expenses keep growing.
According to all the “experts” things really aren’t going to get any better until 2010.
Below are ten trends that are popping-up for most small retailers that I’ve talked with since the first of the year
• Sales are declining
• Customer traffic is down
• Old or discontinued inventory is growing
• Cash flow is a problem
• Bank, vendor or credit card debt is increasing or past due
• Investing personal funds to cover normal operating expenses
• Profit is declining or non-exisitent..
• Stress created by the business is affecting personal & family life
• Considering getting out of retail
• Not having fun anymore
Now is the time to make some important decisions. Don’t put them off. You need to know if you still have a viable business or just an expensive hobby. You need some expert advice. Talk to your accountant first.
If your retail business is no longer a source of income – you have a hobby, a serious hobby – but a hobby. If you are in a financial position to afford that hobby, that’s great. But if you are like most retailers I know, you’re in business to make money.
If you now have a “hobby” you can’t afford – you need some more expert advice.
Call or Email Solutions For Retailers
520-638-6702
chuckhaug@solutionsforretailers.com
Exiting A Retail Business
Feb/12/2009 16:43
Retiring
from a Retail Business:
Store Closing Sale or Sell?
What should you do when it comes time to retire from a retail business? Coopers and Lybrand, an international professional services company conducted a study of the retail industry to explore how retail stores are sold. It surveyed respondents operating approximately 12,000 stores and looked at a variety of means employed to sell the inventory and assets of retail stores, including the
following four primary methods:
1. Going Concern Sale – A store is sold to a purchaser who intends to continue operating it as a business and is willing to pay for some “goodwill” over and above the value of the assets.
2. Bulk Sale – Inventory is sold in lots to a business owner for resale.
3. Auction Sale – Inventory and other assets (furniture, fixtures and equipment) are organized in lots and sold at auction.
4. Store Closing Sale – Inventory and assets are liquidated in a going-out- of-business sale.
Methods #1 and #4 are the most popular.
Retail businesses with large inventories sometimes have a higher asset value than an appraised value based on the store’s cash flow (the money that remains after all the operating expenses are paid but before the owner draws a salary or pays any debt service). This is especially true where the owner has been pumping profits back into the business to build up the inventory.
Suppose a retail store had inventory of $200,000 but a cash flow of only $25,000. Over their five-year ownership period, the proprietors had taken little salary, choosing instead to plow most of the profits back into inventory.
Unfortunately, even if the sellers could realize the value of the inventory in a going concern sale, the $25,000 provable cash flow is insufficient to retire that
much debt and still pay the buyer a salary. In situations like this, it is often a strategic alternative to sell off the assets through an orderly liquidation (store closing sale). In many such cases, a retailer will purchase additional inventory to showcase during the liquidation process. The words, “Liquidation Sale –
Everything Must Go,” are great attention-getters and will drive traffic to a store when all other “motivators” fail.
In a going concern sale, inventory is valued “at cost” (what the seller paid for the inventory).However, in a store closing sale, an owner often offers discounts of 20 percent to 30 percent at the beginning of the sale. If a piece of inventory cost the seller $50 and was priced to sell at $100 (a typical keystone markup), a 30 percent discount would equate to a $70 selling price…$20 more than the owner would have realized on that item if it were included in the price of the business as a going concern. Even at a 50 percent discount, the owner will recover all the money that has been diverted to inventory.
Other advantages of a store closing sale include:
1) A predictable store closing date; and
2) All sales are in cash and credit cards with no accounts receivable.
Solutions For Retailers helps retailers plan and execute store closing sales (for a fee, of course) to maximize the owner’s return. We analyze the best timing for a store closing sale, anticipate the return, contact media reps, train employees, price the merchandise and survey the competition.
If a business generates sufficient cash flow to substantiate a “goodwill” figure over and above the wholesale value of the inventory and other assets, an owner should consider a going concern sale. Two obvious advantages of this type of transaction are:
1)The business continues in operation, which often has an emotional value that is priceless to the entrepreneur who started it.
2) The employees retain their jobs, which is often a major concern to an owner with loyal, long-term employees.
Another factor impacting the decision may be the presence of an existing lease. If the business owner is the personal guarantor on a lease with five years left,
he/she will either have to make arrangements with the landlord to retire that obligation early, or sell the business as a going concern with the buyer taking over the remaining lease obligation.
Store Closing Sale or Sell?
What should you do when it comes time to retire from a retail business? Coopers and Lybrand, an international professional services company conducted a study of the retail industry to explore how retail stores are sold. It surveyed respondents operating approximately 12,000 stores and looked at a variety of means employed to sell the inventory and assets of retail stores, including the
following four primary methods:
1. Going Concern Sale – A store is sold to a purchaser who intends to continue operating it as a business and is willing to pay for some “goodwill” over and above the value of the assets.
2. Bulk Sale – Inventory is sold in lots to a business owner for resale.
3. Auction Sale – Inventory and other assets (furniture, fixtures and equipment) are organized in lots and sold at auction.
4. Store Closing Sale – Inventory and assets are liquidated in a going-out- of-business sale.
Methods #1 and #4 are the most popular.
Retail businesses with large inventories sometimes have a higher asset value than an appraised value based on the store’s cash flow (the money that remains after all the operating expenses are paid but before the owner draws a salary or pays any debt service). This is especially true where the owner has been pumping profits back into the business to build up the inventory.
Suppose a retail store had inventory of $200,000 but a cash flow of only $25,000. Over their five-year ownership period, the proprietors had taken little salary, choosing instead to plow most of the profits back into inventory.
Unfortunately, even if the sellers could realize the value of the inventory in a going concern sale, the $25,000 provable cash flow is insufficient to retire that
much debt and still pay the buyer a salary. In situations like this, it is often a strategic alternative to sell off the assets through an orderly liquidation (store closing sale). In many such cases, a retailer will purchase additional inventory to showcase during the liquidation process. The words, “Liquidation Sale –
Everything Must Go,” are great attention-getters and will drive traffic to a store when all other “motivators” fail.
In a going concern sale, inventory is valued “at cost” (what the seller paid for the inventory).However, in a store closing sale, an owner often offers discounts of 20 percent to 30 percent at the beginning of the sale. If a piece of inventory cost the seller $50 and was priced to sell at $100 (a typical keystone markup), a 30 percent discount would equate to a $70 selling price…$20 more than the owner would have realized on that item if it were included in the price of the business as a going concern. Even at a 50 percent discount, the owner will recover all the money that has been diverted to inventory.
Other advantages of a store closing sale include:
1) A predictable store closing date; and
2) All sales are in cash and credit cards with no accounts receivable.
Solutions For Retailers helps retailers plan and execute store closing sales (for a fee, of course) to maximize the owner’s return. We analyze the best timing for a store closing sale, anticipate the return, contact media reps, train employees, price the merchandise and survey the competition.
If a business generates sufficient cash flow to substantiate a “goodwill” figure over and above the wholesale value of the inventory and other assets, an owner should consider a going concern sale. Two obvious advantages of this type of transaction are:
1)The business continues in operation, which often has an emotional value that is priceless to the entrepreneur who started it.
2) The employees retain their jobs, which is often a major concern to an owner with loyal, long-term employees.
Another factor impacting the decision may be the presence of an existing lease. If the business owner is the personal guarantor on a lease with five years left,
he/she will either have to make arrangements with the landlord to retire that obligation early, or sell the business as a going concern with the buyer taking over the remaining lease obligation.
Selling Your Fixtures During A Store Closing Sale
Feb/09/2009 08:50
Being
able to sell all of your store fixtures during a
Store Closing Sale is always a major concern for
small retailers.
One tool that I've found to be very effective in selling those fixtures is your local "Craigslist". You'll be amazed at the quick response that you receive and best of all the price is right - "FREE". All you have to do is sign up for a "Craigslist" account and then follow the simple instructions on how to post a classified ad.
You should post your ad in the "For Sale" category and usually under "business". If you have equipment or specialized tools, you should consider placing an ad for them under the appropriate category. If possible always include a picture of the items you are selling. It helps eliminate a lot of non-productive responses. You can run more than one ad at a time so I usually put the fixtures into logical groupings and have a picture for each.
You should up date your ad at least once a week. The ads are listed chronologically and by the end of a week, your listing is pretty far down the list of classified ads. As soon as you update your ad you move to the top of the listings again. It's important that you follow the site's rules.
For an investment of just a little of your time and a couple of digital images of the fixtures you want to sell you'll be very happy with the results.
One tool that I've found to be very effective in selling those fixtures is your local "Craigslist". You'll be amazed at the quick response that you receive and best of all the price is right - "FREE". All you have to do is sign up for a "Craigslist" account and then follow the simple instructions on how to post a classified ad.
You should post your ad in the "For Sale" category and usually under "business". If you have equipment or specialized tools, you should consider placing an ad for them under the appropriate category. If possible always include a picture of the items you are selling. It helps eliminate a lot of non-productive responses. You can run more than one ad at a time so I usually put the fixtures into logical groupings and have a picture for each.
You should up date your ad at least once a week. The ads are listed chronologically and by the end of a week, your listing is pretty far down the list of classified ads. As soon as you update your ad you move to the top of the listings again. It's important that you follow the site's rules.
For an investment of just a little of your time and a couple of digital images of the fixtures you want to sell you'll be very happy with the results.
Why Hire A Retail Store Closing Consultant
Feb/04/2009 09:48
Why Employ a Consultant?
Use of a retail store closing consultant will produce a maximum return at minimum expense, reducing potential losses from excessive markdowns, ineffective advertising, excessive expenses, or a loss of momentum.
A professional retail consultant analyzes the client’s situation, tailors the plan to the individual retail client and helps manage the implementation to include merchandising, store operations and sales to produce the best results.
The consultant brings three essential elements to the client - proven marketing tools, experience and management expertise.
The consultant will implement a marketing plan, tailored to the specific characteristics of the retail client. The marketing plan is designed to produce heavy traffic flow and sales volume. The plan will normally address the following issues:
1. Timing
2. Preparation
3. Merchandising
4. Pricing
5. Advertising
6. Point-of-Purchase Promotion
7. Employee Training
8. Security
9. Public Relations
Knowing when to expect peak traffic flow, how long volume can be sustained, when and how much to advertise, when to take a markdown, and other critical questions can only be answered from experience. A retail store closing consultant is a specialist. Experience allows accurate judgments, anticipation of problems, and the ability to implement the marketing plan for maximum results.
The intense environment of a store closing sale is much different than normal business. The consultant is available to solve problems, react to a changing situation and take advantage of every opportunity to enhance results.
Frequently, a client has been able to identify one or two of the decisions recommended solely by the consultant that paid all consulting fees within the first few days of a promotion.
Use of a retail store closing consultant will produce a maximum return at minimum expense, reducing potential losses from excessive markdowns, ineffective advertising, excessive expenses, or a loss of momentum.
A professional retail consultant analyzes the client’s situation, tailors the plan to the individual retail client and helps manage the implementation to include merchandising, store operations and sales to produce the best results.
The consultant brings three essential elements to the client - proven marketing tools, experience and management expertise.
The consultant will implement a marketing plan, tailored to the specific characteristics of the retail client. The marketing plan is designed to produce heavy traffic flow and sales volume. The plan will normally address the following issues:
1. Timing
2. Preparation
3. Merchandising
4. Pricing
5. Advertising
6. Point-of-Purchase Promotion
7. Employee Training
8. Security
9. Public Relations
Knowing when to expect peak traffic flow, how long volume can be sustained, when and how much to advertise, when to take a markdown, and other critical questions can only be answered from experience. A retail store closing consultant is a specialist. Experience allows accurate judgments, anticipation of problems, and the ability to implement the marketing plan for maximum results.
The intense environment of a store closing sale is much different than normal business. The consultant is available to solve problems, react to a changing situation and take advantage of every opportunity to enhance results.
Frequently, a client has been able to identify one or two of the decisions recommended solely by the consultant that paid all consulting fees within the first few days of a promotion.
When a Store Closing Sale Isn't Enough
Jan/22/2009 09:58
When A Store Closing Sale Isn’t Enough.
In this economy, sometimes a Store Closing Sale might not raise enough cash to handle all of your needs. If your debt level is part of the reason, I ask you to consider orderly ways to cash out of your debts, achieved with savings of 20% to 80% of what you owe. You’ll be able to sleep nights without need of having further contact with your selected creditors and their demands.
Should you elect to stay in business, you can do so while relieved of current debt. And in any event, you’ll avoid the stigma of bankruptcy for you and your business.
Did you now? Credit card, medical, leases, personal and business debts, even liens, lawsuits and judgments can be settled at a savings. Most debts can be relieved at a discount, while clearing your name and conscience. You borrow no money, and reduced payments may be made over time and without interest. Creditors can be satisfied, accepting as little as 20 cents on each dollar you owe. This is not debt consolidation or refinancing; instead it is settlement achieved confidentially for you and you are always in charge of your money.
Here’s how it works: A Professional Debt Manager (PDM) is an experienced negotiator who, when retained, studies all aspects of your situation. With each debt, determination is made as to whether you desire to pay in full over time or prefer discounted settlements. The PDM, having obtained limited Power of Attorney from you, serves as an authoritative third party hired to achieve acceptance from creditors you electively assign. The PDM will immediately stop calls, letters and demands from such selected creditors, their agents and their attorneys. Using negotiation skills, the PDM obtains settlements, presents them to you for approval or disapproval. Their fees are based on the savings they negotiate for you. If you aren’t happy with the settlement, you disapprove it and you owe nothing.
When debt loads are out of control, Solutions For Retailers, recommend this tool to its clients. Our job is to help you put more money in your pocket at the end of the sale. We have several excellent PDM firms that we recommend as a result of their performance for our clients in the past. Call us for that recommendation if your debt load is out of control.
In this economy, sometimes a Store Closing Sale might not raise enough cash to handle all of your needs. If your debt level is part of the reason, I ask you to consider orderly ways to cash out of your debts, achieved with savings of 20% to 80% of what you owe. You’ll be able to sleep nights without need of having further contact with your selected creditors and their demands.
Should you elect to stay in business, you can do so while relieved of current debt. And in any event, you’ll avoid the stigma of bankruptcy for you and your business.
Did you now? Credit card, medical, leases, personal and business debts, even liens, lawsuits and judgments can be settled at a savings. Most debts can be relieved at a discount, while clearing your name and conscience. You borrow no money, and reduced payments may be made over time and without interest. Creditors can be satisfied, accepting as little as 20 cents on each dollar you owe. This is not debt consolidation or refinancing; instead it is settlement achieved confidentially for you and you are always in charge of your money.
Here’s how it works: A Professional Debt Manager (PDM) is an experienced negotiator who, when retained, studies all aspects of your situation. With each debt, determination is made as to whether you desire to pay in full over time or prefer discounted settlements. The PDM, having obtained limited Power of Attorney from you, serves as an authoritative third party hired to achieve acceptance from creditors you electively assign. The PDM will immediately stop calls, letters and demands from such selected creditors, their agents and their attorneys. Using negotiation skills, the PDM obtains settlements, presents them to you for approval or disapproval. Their fees are based on the savings they negotiate for you. If you aren’t happy with the settlement, you disapprove it and you owe nothing.
When debt loads are out of control, Solutions For Retailers, recommend this tool to its clients. Our job is to help you put more money in your pocket at the end of the sale. We have several excellent PDM firms that we recommend as a result of their performance for our clients in the past. Call us for that recommendation if your debt load is out of control.