How do I stay afloat? Need advice asap

[nasgr]

Hi guys,

So, my business was previously ran with bad management and it has been over two months since I took over and reopened (had been closed for a year). I do face challenges such as how to bring back the old customers and attract new, just so I get enough business to stay open year round. The business I have is a produce market/fruit stand and I know what I have to do to "survive" all year long.

Now, the problem I currently have is that due to business being slow, and always having something to pay, I have a hard time saving money to use towards buying new inventory (inventory that I don't currently carry, but I know will sell) and I always end up working towards paying someone/something that I owe. I can improve traffic once I fill up all the shelves and space, and bring in items that customers want and will buy, but I don't have extra money to do that so I'm limited to limited inventory (very limited) that I sell and then use some of that money towards paying a bill and some of that money buying that same inventory (which sells, but isn't enough to attract more customers). As a result of all this, I'm "avoiding" to do any real advertising (except a couple signs outside the business) because I don't have a lot of inventory. Basically I'm stuck in this cycle where all the money I make goes to paying bills, which money is not enough to buy more inventory because there's bills that need to be pay. I'm always "chasing" instead of being ahead, if that makes sense.

The inventory that I do have, I always pay upfront (instead of getting it in credit and paying later) because I want to know that what I have in the store is paid off and is my money to use as I wish once it's sold.

The questions that I have is: Should I just hang in there until business improves and in the meantime save as much as I can and bring in as much new inventory as I can? Should I start buying on credit for the items that I can/from suppliers that trust me, just so I fill up the store and build the business that way? Another thing I could do, is get new inventory on commission where the supplier will get a percentage of sales-but I will actually have to go out and find people willing to do that.

I work by myself every day of the week. Obviously I can't afford to hire someone-so another question that I have is is it a good idea to simply take a day off and close once a week or can I not afford to do this?

I'm very confident the business will pick up and be successful, it is at a great location and the customers that I do have are happy with product and prices (and always returning, 80% of customers are returning). I need some advice on how to break from this cycle I'm in just so I can be more in control and expand. I will appreciate any feedback

[Kreater]

#1 You need 1 day off per week, especially if you're working solo. You'll burnout eventually if you don't take at least one complete day off. I close my business on Tuesday, since it's the slowest day of my week. I recommend closing on whichever day of the week is slowest for you.

#2 I recommend buying more stock on credit, if you know it'll sell for certain. That way you'll bring in new business who is attracted to your new stock. Plus people enjoy a store with full shelves and stocked.


Other than that, you just have to work for your profit. Reputation helps, once you're in the game long enough. It's taken me 3 years to accumulate reputation to start making better money from sales. I work a second job for additional income.

[Freelancier]

Kreater's advice is spot-on.

Your other idea of adding consignment-type items is also good, but I'd start with items that don't have a short shelf life (e.g., supplements or "energy" drinks). The idea being you want something that doesn't take up a lot of space (i.e., has its own floor stand that you can place near check-out) and has a decent profit if you sell it and that matches what your customers might purchase from a health food store (since they're at your place because they're into "healthy" food).

The other thing to think about is how much profit you're making from your floor space. All retailers try to maximize their profit per sq foot, since their floor space is limited. Look at your item mix and figure out how to fit more items (placing some smaller items above other items using tiered shelves, for example), figure out which products aren't turning fast enough and cut back the space for them. Really take a tough look at your product mix and identify what's working and what's not and trim the "not working" items and use your floor space to increase the number of profitable items.

[huggytree]

if you need money and you are confident it will work then you need to sell something or take out a 2nd mortgage on your house,sell your car, borrow from family

i dont recommend going into business w/o a cash reserve and money to work with....

i pay my suppliers at the end of every month...not cash upfront....i recommend looking for a supplier that will give you 30 days credit


realize this----if you borrow $$ or buy on credit and your wrong about the products selling then you could be out of business.....

you could get a 2nd full time job and build up some savings?? do it for 6 months and im sure you will be out of the hole your in

[Harold Mansfield]

All good advice here. This is the situation that separates the Men from the Boys. Almost all Entrepreneurs go through this exact moment.
I can't tell you where to get the money, but if you have assets, or favors to call on and you believe in yourself and your business as much as you say to do, now is the time to cash them in.

[nasgr]

I truly appreciate everyones' feedback, thank you

[DeniseTaylor]

I completely agree with everything here. You have to work to break out of the vacuum you're in. I would buy on credit to get yourself over the hump.

What I would like to add is to be sure to stiffen your discipline. Don't overbuy or buy on impulse. Perhaps you can balance the tried and true with experimental items (a few), to keep things interesting for your customers. Could also help to attract new customer-types you don't already have.

Then, once I got the inventory, I'd step up advertising accordingly. There are lots of cheap/free ways to promote and if you have happy customers, use that goodwill to grow. Can you run some kind of special that will prompt people to tell others about you? Like a two for one, or something like that?

I'm sure you'll do fine as long as you continue to work hard and carefully navigate through this phase.

Good luck! :-)

[Blessed]

Lots of good advice here!

Until you can do a focused marketing/advertising campaign do take advantage of the free & low cost advertising options that are available. Make sure you have a voice on Social Media - Twitter, Instagram, Facebook... those are all places to start helping get the word out about your business.

[nasgr]

Good advice indeed, thanks again everyone I wasn't really expecting this much feedback so I really appreciate it.

Business seems to have picked up a little in the past few days, so that's good. I will be getting more inventory this week and more next week.

As far as advertising goes, I'm thinking of hiring a couple people dressed in various fruit customs holding signs outside the business for 2-3 hours and on certain days when there's most traffic. I'm also going to send flyers via the post office (it's relatively cheap) and include a coupon. I'm also going to put up banners for X% off on a my slowest day and X% off for new customers. I do not have a lot of "friends" on my fb page but I will put up a sign/banner to remind people to drive safe and underneath to like our page on fb and I will start posting specials and deals on the page. That should be enough to bring in more people and once I can afford to spend more on advertising I'll do "bigger" things.

[cathyc100]

Boy do I understand where you are. I am in a similar situation in a different industry. I have had to take a hard look at myself and first say, Do I want to make this business work? What am I not doing that I need to be doing to make it work?
I know it is tempting to buy on credit. However, be careful as if you currently have good credit you don't want to damage that. You should look into business lines of credit and use your credit responsibly to grow your business. If you need help let me know. I have partners that can help guide you and get you money for your business without just charging on credit cards.
My business is websites/mobile apps and marketing. I certainly can help you put together a game plan to utilize the internet as a way to grow your business. I know funds is a major issue and I work with all kinds of people with all kinds of budgets and would be happy to do an initial consultation with you to determine your business goals and what I think I can do to help you work towards that year round presence for your business. We need to stick together and help and support each other.
If you want to make this business work, get in touch and let's work together to make that happen.

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[chrismarklee]

What you need to do is get another job besides your internet business. Also, maybe market something strange and unique. I know this may be hard advice. I see so many internet businesses failing

[LeroyB3]

Why not get try to get the upfront capital from your customers? I could definitely see a monthly fruit club or something similar. They pay $X/month to get A, B, and C. You now have the money up front to purchase that extra supply you need to get more customers. Just a thought. Much less risk this way as well.

[Zman]

Just about every small business owner has been in your situation. Here is my opinion. Marketing solves most problems... but if your shelves are not full (almost overflowing) with merchandise, then all the marketing in the world will only bring people in to see a business not ready for business. People make judgments on your store from day one. Put your best foot forward by making deals with local produce suppliers to get and keep your shelves full. Then... once the store is truly ready for business, turn your focus to marketing. You can market your business many ways for little or no money. It's hard work but it can be done.

Go to other businesses and ask them to refer people to you and you do the same for them. Put coupons in your customers bag to bring them back or give them a discount for telling others about you. Give a portion of sales to charity over a day or weekend and tell the local media about it (and get free advertising when they interview you).

There are many, many ways to market your business. But make sure you are ready for business first. The more return business you have the less your overall advertising costs will be and the higher your net profit.

[shrinkme]

There are a lot of good suggestions here. I only wanted to say that problem solving tends to be something you do in business a lot. Ultimately you must figure out a way through cash flow issues and build your business. Good luck!

[lukedenton]

Friend,

You are faced with a classical business problem. It is a very common problem. If you had gone to business school, you would have learnt all about it and how to deal with it.

I have had dozens many businesses come to me for help on this same problem. Something like this: I want to but X to do Y, and from experience I am 100% sure that Y will be successful. But I don't have the money to do Y, and I cannot take a loan because the interest will make Y unprofitable.

If I was consulting with you one-on-one I would look over all your finances and sales and formulate for you an exact plan. But since I don't have that information I will give you general advice on what to do.

Follow this and I guarantee your problems will be solved soon.

First, DO NOT TAKE MORE LOANS. The interest rates will likely erase your profitability in sales. You are in retail--small profits--you cannot take the hit. DO NOT MAKE THIS MISTAKE WHATEVER YOU DO. I cannot tell you how many make this mistake before they see me.

You need to CUT BACK ON EXPENSES. how much are you spending on electricity? On water, etc? Make a list of your expenses, and cut back.

Keep track of how much you are shaving off each expense.

You say you are in a "great location". That means it must be valuable, no? This means, you can definitely rent out some space. Storage space, in particular, would be easy to rent out. And you gets lots of traffic? That would make it easier.

See if you are wasting space. Many small retailers have too large storage areas, completely unnecessary. I have seen this. Get rid of clutter, stack things more closely, and rent out the extra space. With i work with clients, I develop a list of product and profitability and the cost to keep the product in the store. You should make one of these too and make sure that you get a positive value on all your product.

Use this extra money to but the most profitable inventory you are wanting.

Finally should you work seven days a week? If you can, yes. But you can maybe reduce your hours. Keep a written account of your sales every hour and after a few weeks look for weak hours with low sales. You can cut off these hours instead of a whole day.

I hope this helps.

[nealrm]

Luke is right. Getting a loan or buying on credit is only going to make things worse. DON'T DO IT!! It is EXTREMELY poor advise!!!

Right now you are using the profits on current sales to buy goods to replace those sold. However, you don't have enough profits to expand and buy addition inventory. If you bought on credit, the sale of those good would also have to go into purchasing replacement inventory PLUS you would have an additional bill of the interest on the credit.

As Luke stated this is a classic problem, the root of the issue is that you are not making enough profits. There are 3 ways out: 1) Reduce cost, 2) Increase prices, 3) Get out of the business.

Right now fresh, locally produced goods are an "in" item. Don't try to compete with grocery store prices. Instead aim for the premium prices. Even a slight 2% price increase can put addition profits in your pocket that can be put towards addition inventory.

Last: One of the key insights in business is knowing when a market will not support a business. Sometime you can't cut enough costs or increase profits to make a business worth your time. Too many people fall into the trap of only seeing the money coming in the front door and ignoring the money going out the back. Sales have to cover more than just inventory and operating expensive, they need to provide you with a reasonable salary. Loans won't resolve that issue.