What Can We All Do to Help Toy Manufacturers through a Tough Year

In my last two blogs, I have written about the economic strain that is starting to show up in the toy industry. 2/3 of Independent Sales Reps I contacted reported a slow-down in commission payments. I believe this means that, because late payments to sales reps are a leading indicator of companies becoming financially troubled, some toy manufacturers may be undergoing economic stress. 

In my last blog, I stipulated that this will not mean the weeding out of poor products and therefore a stronger toy industry. Rather, it will mean that underfunded companies whose cash flow has depended upon direct imports will not have the funding or sources of capital to keep going. This will mean that lots of good and even great products may go away because their manufacturers will fail before consumers get a chance to vote with their wallets and pocketbooks.

So, the question is, “what if anything, can be done about it?” It’s unfortunately late in the year so there is not much that can be done for this year. Here are some fundamental ideas, however, to consider for this year and years to come:

1. If you are a retailer pay your bills on time. I know that you are feeling the pain too and that you also need to protect your cash flow. You do, however agree to terms when you place a purchase order so honor them. It could be the difference in whether that line that delivers sales for you will be around next year. 
2. If you are a manufacturer try saying no. Insist on direct import and if it means the loss of a big sale it may be better to hobble through tough times than going out of business because you cannot fiscally accomplish what your customers want you to do: Carry all of the risk and the cost of goods.
3. If you are a toy industry association meet with banks and other sources of investment to come up with ways to help great little toy companies who are credit worthy but underfunded. An infusion of just a little cash and / or some sage advice at the right time could be the difference between life and death. It would a good business decision for associations that rely on healthy members, a good profit opportunity for investors and, yes, a good deed.
4. Finally, for goodness sake, if you are a manufacturer pay your reps on time. In fact, treat them better than ever. There will be more on that subject in my next blog.