The Gift and Home Décor industry has endured radical change

The Gift and Home Décor industry has endured radical change over the last decade and we all expect these changes to accelerate over the next few years. Three years ago the industry was over-supplied, meaning that there were too many manufacturers and importers chasing too few retail shop owners. These days that imbalance has increased, setting us up for the inevitable shakeout. That inevitable shakeout is what I am hoping to help coach business leaders through in this Blog. 

Many industry experts want to talk about increasing sales to solve our problems. It’s an appealing prospect but in today’s economy it’s like trying to push water uphill. Even when there are opportunities to increase sales by doing something different (integrated marketing programs, new products, in-house sales efforts, chain stores, etc) few companies can afford the cash drain to attempt these new ventures. 

In a challenged economy Rule #1 must be to preserve cash. This requires CEO’s to make their business cash positive first and then worry about profits, growth or anything else second. Cash management is the world’s simplest concept and one we all learn as kids. Unfortunately, business schools and the accounting profession have over-complicated our companies and helped us lose track of the basics. 

Simply put, if we spend more than we bring in, we’ll eventually run out of money. If we spend less than we bring in, we’ll accumulate wealth. In a recession, your business should be run this simply. When a bank hires me to replace existing management within a debtor company, I immediately shift the business to a cash-based accounting system. 

The goal is to stay alive and earn credibility. With a cash based operating plan, my clients are paying their bills and fulfilling their commitments. Let everyone else over-promise and under-deliver, you will be the class star when you shoot straight and deliver. 

With cash-stability, we can then afford to invest in new sales and marketing ventures. Without cash-stability you are on a melting iceberg in a warming sea. 

For more information on running your business sustainably, download and read our free report at www.DorsetPartners.com