Things to know if you are thinking about closing your business running into debts?
Just one more season may not help.
The biggest lie that many independent retailers tell themselves is this:
“I’m going through just one more season and I know I can turn things around”.
I am here to tell you – in over 20 years of liquidating stores and helping independent retailers in the process, that is the biggest mistake you can ever make in running a retail business.
Rather than closing profitably, you actually end up accumulating more debt.
Did you know that one of the best time to close your store for the largest profit is during your best sales season?
I know that might sound crazy but it is absolutely true! Think about it.
One of the biggest reasons that people have to close their doors is low customer traffic and therefore low sales volume, right?
Any store closing sale will need to have some very strategic and psychologically inducing paid advertising to lure old and new customers into a store in order to create what I call a “buying frenzy” (all at minimal discounts I must add).
You will have increased customer traffic during your best sales season ANYWAY, and added to that the new customers from the advertising…. BOOM!
These two combined elements are what create the excitement and fear of loss that is needed to motivate customers to buy at the minimal discount prices of a going out of business sale.
Your best season may by summer if you have a lawn and garden business.
Your season may be the spring if your a bridal shop.
Fall maybe your highest sales season if people are furnishing their home for the holidays.
Home decor and gift stores may find that the holiday season are their best sales months.
No matter what type of merchandise you sell, I have liquidated it all and I can tell you the timing of when you start a store closing sale is critical.
imagine your store looking like this
With long lines of customers and minimal discounts
And looking like this after your debt clearing business sale is over
There are many things to consider in terms of timing.
- Going back to the home decor and gift shop store example, holidays are most likely the best sales season.
- However, you don’t want your store closing sale in competition with all the other sales happening during that season.
- You want to get your customers hooked on your sale before the “sale noise” of the season happens.
- How the out of business sale is advertised and the timing of it is very strategic so that the most profit is made and everything is sold to the bare walls.
- And, if possible carrying your sale into January (or whatever your slow season happens to be) is ideal.
- Because you will have capitalized on the organically higher traffic AND the infusion of excited new traffic from the strategical paid ads for your big store closing sale.
Then as you trend toward the end of your gob sale into your “slow season” your sales will be higher yet again because you’re at the end of your big Sale when discounts are higher.
Hence, higher profits OVERALL for you!
Wanting to get one more good sales season under your belt is understandable if your store has been struggling for a while.
It would seem to make sense to try to pay off some of your debts that have piled up, pay the landlord without cringing and see some sort of profit from all your hard work, right? Wrong!
Taking a struggling store through “just one more season” can put you in a much worse position than acting as soon as you know that it is time to liquidate and move on.
I have seen this time and time again.
An independent retailer hangs on for three to four months of their high sales season to finally hire someone to help close their store.
By this time they have sold out of their best merchandise with no intent on ordering more.
The items are picked over and what is left after a self run “sale” are items that the customer didn’t want.
That is when I get a call to help close the store.
At that point there is little that anyone can do to help and if someone tells you differently I would be highly suspect.
A successful store closing sale needs to right mix of all kinds of merchandise.
A merchandise is the desirable things that sell well in your store. B level items are the items that sell moderately well.
C level is items that will not move, even with a price markdown.
Trying to have a liquidation sale with only C level merchandise is extremely hard if not impossible and is unlikely to earn a profit.
The best case scenario is to have three levels of merchandise with the ability to order more and “feed” the sale in the first couple of weeks of the process when the discounts are lowest and the “buying frenzy” is at it’s highest.
Be a smart retailer and do not get stuck lying to yourself in making a last effort to turn things around with “just one more season”.
With the independent retail market climate becoming more challenging every week, another season trying to make it work could be extremely costly.
The pain that Amazon and other online retailers are causing independent store owners is not going to let up in the future.
Do your research now and get some help.
Do not wait until after your high sales season to find the best fit for an ally to help you close your business.