Since the Federal government seems to be having problems handling our money recently, it’s time for us consignment, resale, and thrift shops to
take a look at balancing our budgets and handling our funds responsibly
and with a goal of growing our business and making it stable. Here’s some areas to look at:
1. Are you meeting obligations?
If you are a consignment shop, you know the joys of being able to stock your showroom with goods that have a cost of attainment of, basically, zero. But with that joy comes responsibility: is every penny of the money you owe consignors set aside where it will be safe from spending on other obligations like rent? If it’s Consignor #4521’s money, it’s not yours. Simple as that.
If you’re a buy-outright resale shop, your open-to-buy is the same obligation. Don’t spend it on anything else, and make sure that your OTB grows as your business does.
2. Are you maintaining your reserves?
You know that old saw about having 6 months of business and personal expenses in reserve? It’s an old saw because it’s true. Whether your shop is 4 months, 4 years, or 4 decades old. So keep those sawbucks safely aside, because it would be a shame for your business to go down the tubes simply because you think you’ve gotten this far, nothing will stop you now. Keep that reserve fund up, keep it reflecting today’s costs, and do not spend it on something else. It’s your cushion, your parachute… and you wouldn’t turn your parachute into a ballgown simply because they’re throwing a gala on that airplane over there and ballgowns are more fun to have than parachutes.
3. Are you using profits wisely?
Recently, a thrift shop manager crowed to me about how she got a truck-load of used fixtures for $3200. Great deal… had she needed that type of fixturing. The thing was, these were not the fixtures that the store needed. It ain’t a deal if it doesn’t add to the growth of the business. She might as well have thrown that $3200 away. Worse, actually, because there were much better things to invest in for that store, so spending the money foolishly meant a loss of the potential revenue she could have had, had profits been invested where needed. So the money was gone, and so was the income the money could have generated.
Auntie Kate The Resale Expert 