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Go With the Flow
By: Julie Sturgeon
Posted: July 22, 2008, from the March 2007 issue of Skin Inc. magazine.
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Thankfully, the software projection worksheets steer many owners clear of disaster, offering snapshots of when to fight and when to fold. If you believe your situation is worth saving, start on the outflow side. “The first thing people in the real world do when they’re about to bounce checks is not pay their vendors,” Berry notes.
Yet, in Gray’s experience, these partners usually offer a solid branch to grab if you approach them for help. For instance, arranging a 30-day payment window with wholesalers means you can sell the product to raise the cash for that bill. Just don’t wax generous and extend that same credit to your customers, allowing them to pay for treatments after the fact, Hart adds.
“It’s amazing how much money you can save by stocking up on retail and supplies when the vendors are in the mood to be generous,” Gray points out. “If you can only pay part of an invoice, do that and call them before you mail the check so they do not think you are trying to avoid paying them in full. Every industry and every business goes through tough financial times, and if you all make an effort to pay and communicate with each other, you can all work through the tough times together.”
Gift certificates represent a common, one-shot answer to quick cash for this industry, but unless you sell them with the right attitude, they become your worst nightmare, as Adams can attest. That’s because if you use them only to bail you out today, you likely won’t have the income to pay staff to redeem these certificates six months down the road. Instead, control the certificates’ havoc by calling the purchaser to encourage an appointment. This strategy also reaps new customers to boost your cash intake in the future. Adams places one-year expirations on his gift certificates.
Banks offer the most muscle on the outflow side of the river to rescue you, but walk in forewarned.