Friday, March 28, 2008

Cash Flow And Being Thrifty!

I was brought up with the notion that you when you buy something you go for the best price, even if it's a bit more than you need right now you know down the line that you'll use it. I now realize this isn't a good way of doing business in regards to cash flow problems.

What I (we) need to do is not bring my (our) personal spending styles to my (our) business. When faced with a buying decision we should mentally review and calculate what is the best business decision to make in regards to cash flow.

Now ABC company has a great item you want to bring into your store. You think it will be well received and your customers will buy it. Now minimum order is $100 but if you spend $500 you get free shipping. Click there goes that thrifty mindset on getting something of value for free.

But it's really not free because you've just invested $500 in merchandise that you are not sure will do well in your store. The $100 order would make a nice display and if they sell of course you'll make a bit less profit because shipping isn't free but it's a much safer investment for your money to just order the small amount and not get caught up in bargains. If it goes really well then do the bigger order.

I love sales and bargains and they just seem to find me and because I have an impulsive nature it's a problem. Hopefully I've learned my lesson after getting rid of about $300 worth of inexpensive jewelry for free to a friend who has a store that might do better selling it than I did. I tried everything to sell that stuff from ebay to garage sales to flea markets, but I realized that I was wasting my energy and time (especially when the flea market yeilded me $0.00 for 7 hours of work. )

So this morning I was up early and thinking about this and how I'm just moved to buy more because shipping is less. Now there's inventory to think about how to move it out and that's not a smart business move.

Now I'm not saying to keep your store empty with just a small amount of stuff, that's not my point. I'm saying that when you are purchasing an item don't make the decision to buy more because there is a sale.

Cash flow is king in the business world, not saving dollars and cents. Think cash flow first before making a buying decision.


Linda

Linda

2 comments:

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Erik Alloway said...

Good point! Before buying items, I think we need to think deeply if a certain item is very necessary and can be used on a daily basis. I know it’s hard to control the urge of buying, but if we don’t want immediate loss of money to occur, then it is best to reconsider before buying.

Erik Alloway