In such a volatile economic environment, small retailers are struggling with cash: you are facing tight bank lending; your customers seem to come back, but they do not spend that much.  The good thing is that you have already navigated your business through the worst time. Now, you need to be cautious and ensure that your business generates positive cash flow, so that you can grow your business during the upcoming recovery.

Here are some tips:

Reward programs and gift cards: If you want your inventory to move faster and generate more cash, reward programs and gift cards are better methods than by using discounts. Simple discounting is like giving your customers cash back, but they probably will not use their extra cash at your store. However, reward programs and gift cards ensure that your customers use those cash savings at your store for your products

Keep optimum inventory levels:  Inventory generates your cash, but it consumes your cash, too. The principle to keep an optimum inventory level is to invest minimum cash in inventory to meet market demand.  We have talked a lot about it, reaching this goal requires quick response strategy: order as little as possible at the beginning, read your daily sales reports and ultimately make reorder decisions based on those short term demand trends. 

Concentrate on core lines:  Every retailer has some product lines which generate more sales than others. Why not focus on those popular lines? You may have various reasons for maintaining the slow moving products, but why not use the funds you have been using to buy the least popular items to expand your hot lines? Or develop a related line of hot lines? (Note:  Whenever you want to test market demand, you can start with a small quantity, see the trend on the daily sales report and then confidently invest more on the hot items.)

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