Delivering The Number
Copyright (c) 2012 Ted Hurlbut
The term 'new normal' implies changes of a lasting nature. Recessions are often thought of as temporary events, a pause before business as usual resumes. This recession, however, has been so deep and traumatizing in such a profound way, that it seems clear that things have indeed changed. The recovery is not so much a recovery as much as it is no longer a recession. We're not going up, but at least we're not going down any further. We are living in a 'new normal'.
For independent retailers, this is all pretty unnerving. Recessions always meant recovery, but not so much, this time. An "L shaped" recovery is not much of a recovery at all, by definition and the very shape of the letter. Recovery always meant a rebound in sales, which helped retailers overcome the financial strains brought on by recession. If there's not going to be a bounce back in sales, how are independent retailers to return to financial health?
Independent retailing in the next three to five years is going to require much greater financial skill and discipline. Put simply, independent retailers must become adept at delivering a number. Delivering a number means taking a business's revenues, whatever they might be, and turning them into a specific, planned bottom line number.
For simplicity sake, let's talk in terms of cash flow (and because financial health, in the end, is all about cash flow). For an independent retailer, delivering a number means hitting end-of-month cash flow objectives each and every month, essentially regardless of revenue levels. This requires a forward-looking plan, with monthly budgets for everything that impacts cash flow, which serve as benchmarks.
When revenues are coming in below plan, or margins are not up to budget, future revenue or margin dollar budgets must be brought down until whatever marketing initiatives that have been put in place have taken hold. Expenses must be planned down as well for those future months. The number must be delivered.
If, on the other hand, expense items are running above budget, they must immediately be brought back in line. Nothing is immune. Expenses that were once thought of as fixed must be reworked, renegotiated or restructured until they are variable. The bottom-line cash flow number must be met, each and every month, without fail.
For independent retailers, this requires an attention to business detail which many are far from accustomed to. That's what makes the 'new normal' so disquieting. The customer cannot be counted on to return independent retailers to financial health. The return to financial health requires a commitment to fundamental business discipline, and to delivering a number, each and every month.
About the Author
Ted Hurlbut is a retail consultant, coach and speaker who helps independent retailers increase sales, profitability and cash flow by leveraging his deep expertise and proven retail know-how, Get his FREE report "The 16 Essential Elements of a WINNING Independent Retail Strategy" Visit: http://www.hurlbutassociates.com/get-the-16-essential-elements-of-a-winning-independent-retail-strategy/
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