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greenoak
03-02-2011, 08:55 AM
our annnual problem is about money...the first 3 months we spend like crazy and it wont really sell big until later..... we are on credit terms with lots of places, LIKE FROM THE BIG COMPANIES we ordered from at the chicago gift show, , ...but the big things, the garden iron, way over 10k, and a few other major suppliers do not offer any kind of credit, and auctions never offer credit.... and i dont even want any more credit....
so its just a tough time of year....
lots of advice is to budget your money....but here in the slowest part of the year i have to make huge orders...the money to pay isnt in the january or februarry departments....
our solution seems to be using our line of credit and credit cards , and use as little of that as possible and just being kind of broke all the time untill may....
we just had a huge februaARY SO IM REALLY FEELING OPTIMISTIC...

am i missing another way to look at this?

Spider
03-02-2011, 09:28 AM
Yes. You should (or could, to be more polite) set aside profit from the later part of the year to purchase goods in the early part of the next year. That requires a change in basic business philosophy, from an "empty shelf" to a "full shelf" strategy. That is, instead of having a business cycle of empty shelf - buy stuff - sell it - back to empty shelf, you would operate full shelf - sell stuff - replace it - back to full shelf. It would probably require you to change your business year to May 1 - April 30, rather than January 1 - December 31.

Another approach could be - Have a more continuous buying regime. As soon as (or before) something is sold out, decide what will replace it (same stuff or something different) and make the purchase right away, so that you are continually buying replacements throughout the year and making your purchases while you are making profit.

greenoak
03-02-2011, 09:44 AM
i hear you spider..i think we do full shelf....in august when the garden money is there we buy christmas stock...... when we end the year with a clean slate and us all paid we feel good....we do buy continually...dh says too continually !!
..one trouble is the garden iron is huge in size and it comes up from texas in big 5000$$$ loads and before the season.......so it cant be in staggared 500$ groups, the shippping would really be impossible. in a big load the shippping is under 10%, or free from one guy.....

Business Attorney
03-04-2011, 07:20 PM
Ann, it's commendable that you don't want more credit and maybe you have as much as you should have, but borrowing money to fill short term needs is often a good solution. For many businesses, avoiding credit can be a very costly strategy. The problem with it in many cases is that if you keep excess cash for 40 weeks of the year so that you don't have to borrow during the 12 down weeks, your opportunity cost of not deploying the cash for 40 weeks more than offsets the cost of paying interest for 12 weeks of the year.

Obviously, there is also a risk element that must be taken into consideration, and as we have seen in the last few years, excessive amounts of debt can be very, very bad. But almost any mid-sized and larger business will have a line of credit to allow it to balance its cash needs throughout the year.

greenoak
03-04-2011, 09:33 PM
i hear you....we definitley dont avoid credit and need our 'line' ....but its tricky....and then so much is offered by the suppliers when they know you are not too risky. ...60 day terms, even 90 day terms..
.our first years were no credit at all[the auction world] and we were so lucky we never offered any credit or terms to anyone either....and dont now either, ..it was different then and some easier...