Store Closing
Do you have a retail business or just an expensive hobby
Feb/28/2009 08:56 Filed in: Store Closing
Sale
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 Filed in: Store Closing
Sale
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 Filed in: Store Closing
Sale
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 Filed in: Store Closing
Sale
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.
Store Closings Sales & Newspaper Ads
Jan/27/2009 13:52 Filed in: Marketing
for the Small Retailer
Store Closing Sales and Newspaper Ads
You hear it almost every day, “Newspapers are dying”. And for the most part that’s a true statement. Most people now get their news from cable TV or the internet. The daily newspaper gets thinner every day. In the current economy the multi pages of real estate ads and car dealer ads are no more. Classified ads are now on-line and ads on Craigslist are free.
So how do you advertise your Store Closing Sale? There are lots of choices, but believe it or not, advertising in the right kind of newspaper still pays off.
Running a “Store Closing Ad” in a local weekly paper still produces good response. If your weekly newspaper provides lots of editorial about local people and events, and has paid circulation, it’s a pretty sure thing that it is still being read. But before you go out and sign-up to run your ad you need to make sure it covers your primary market area. That is an area that is usually a 2 – 5 mile radius of your store. 75% or more of your customers will live within that area. Any advertising outside that area is usually wasted.
The larger your store or the more sparse the population, the rather the radius of your prime market area extends.
Newspaper ads are not our first choice for advertising a Store Closing Sale, but they still are in the mix of the top three types of media we use. Just a reminder – the newspapers we use are almost always local, weekly, paid subscription papers that do a good job of covering your primary market area.
You hear it almost every day, “Newspapers are dying”. And for the most part that’s a true statement. Most people now get their news from cable TV or the internet. The daily newspaper gets thinner every day. In the current economy the multi pages of real estate ads and car dealer ads are no more. Classified ads are now on-line and ads on Craigslist are free.
So how do you advertise your Store Closing Sale? There are lots of choices, but believe it or not, advertising in the right kind of newspaper still pays off.
Running a “Store Closing Ad” in a local weekly paper still produces good response. If your weekly newspaper provides lots of editorial about local people and events, and has paid circulation, it’s a pretty sure thing that it is still being read. But before you go out and sign-up to run your ad you need to make sure it covers your primary market area. That is an area that is usually a 2 – 5 mile radius of your store. 75% or more of your customers will live within that area. Any advertising outside that area is usually wasted.
The larger your store or the more sparse the population, the rather the radius of your prime market area extends.
Newspaper ads are not our first choice for advertising a Store Closing Sale, but they still are in the mix of the top three types of media we use. Just a reminder – the newspapers we use are almost always local, weekly, paid subscription papers that do a good job of covering your primary market area.
When a Store Closing Sale Isn't Enough
Jan/22/2009 09:58 Filed in: Store Closing
Sale
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.
Choosing The Right Consutant For A Store Closing
Jan/17/2009 12:56 Filed in: Marketing
for the Small Retailer
How to choose the right marketing consultant for
conducting a Store Closing Sale
A small guy needs help too
The recession is playing havoc with the retail industry. The International Council of Shopping Centers estimates that almost 150,000 stores closed their doors in 2008. Many of those were small retailers that tried to do it without any professional help. When large chains, with large staff like Mervyn’s, Sharper Image, Linen-n-Things, Whitehall Jewelers hire professional retail consulting organizations to run their store closing sale, you have to wonder why so many small retailers think they have the experience and knowledge to pull off the most important sale they will ever run.
There are quite a few very good retail consulting companies out there that help the small retailer maximize the results of his Store Closing Sale. But as with any group there are some questionable ones out there.
Here are some things to consider when choosing the right professional.
• Make sure that the consultant that you hire has experience marketing and managing a Store Closing Sale. Many of the larger consulting companies contract with former retail professionals who have a good retail background, but no experience conducting a Store Closing Sale. This type of sale is different.
• Be cautious of anyone that insists that a decision be made today. It’s OK to make a decision if you have done your due diligence and are comfortable with the plan. Do not be pressured into acting hastily.
• Who is going to be working with you to run your sale? Many times one guy sells you the program and another guy does the work. Be sure you have the opportunity to speak or visit with the consultant who will be working directly with you. That “sales” guy will be long gone after your sale starts.
• Can you cancel the agreement if they are not getting the results necessary? If not, don’t hire them.
• How is payment structured? If it is a flat fee, they get paid if they obtain results or not. The best scenario is a base fee (covers expenses) and percent of sales (based on performance). If they aren’t comfortable with that arrangement, they lack confidence in their ability to produce.
• You must be 100% comfortable with the consultant that you work with. You won’t always agree with him, but you must believe he has your best interest at heart.
A small guy needs help too
The recession is playing havoc with the retail industry. The International Council of Shopping Centers estimates that almost 150,000 stores closed their doors in 2008. Many of those were small retailers that tried to do it without any professional help. When large chains, with large staff like Mervyn’s, Sharper Image, Linen-n-Things, Whitehall Jewelers hire professional retail consulting organizations to run their store closing sale, you have to wonder why so many small retailers think they have the experience and knowledge to pull off the most important sale they will ever run.
There are quite a few very good retail consulting companies out there that help the small retailer maximize the results of his Store Closing Sale. But as with any group there are some questionable ones out there.
Here are some things to consider when choosing the right professional.
• Make sure that the consultant that you hire has experience marketing and managing a Store Closing Sale. Many of the larger consulting companies contract with former retail professionals who have a good retail background, but no experience conducting a Store Closing Sale. This type of sale is different.
• Be cautious of anyone that insists that a decision be made today. It’s OK to make a decision if you have done your due diligence and are comfortable with the plan. Do not be pressured into acting hastily.
• Who is going to be working with you to run your sale? Many times one guy sells you the program and another guy does the work. Be sure you have the opportunity to speak or visit with the consultant who will be working directly with you. That “sales” guy will be long gone after your sale starts.
• Can you cancel the agreement if they are not getting the results necessary? If not, don’t hire them.
• How is payment structured? If it is a flat fee, they get paid if they obtain results or not. The best scenario is a base fee (covers expenses) and percent of sales (based on performance). If they aren’t comfortable with that arrangement, they lack confidence in their ability to produce.
• You must be 100% comfortable with the consultant that you work with. You won’t always agree with him, but you must believe he has your best interest at heart.