Your retail business is doing poorly and or your profits continue to get smaller each year. You are in desperate need of cash flow to pay your overdue bills. Should you hire a consultant?

If you are going to follow the consultant?s advice, it is the right thing to do. On the other hand, if you don?t want to follow the consultant?s advice, don?t waste your time or money. In fact, you should sell your business or close your store. Your business will continue to slide until eventually your cash is gone.

I have done many consulting contracts the past few years. They have been in different industries, but something?s are common in all stores. Here are some things successful owners have in common:

1. The owner?s that have experienced the best results have an open mind to the consultant?s suggestions.

2. The owners and their employees give full cooperation to the consultant. Management has a tendency to be upset with a consultant. They feel that their toes have been stepped on and don?t want to follow the consultant?s advice.

3. Good owners know their previous course of action will continue to produce unsatisfactory results.

Here are some of the biggest issues that consultants have with owners.

Ad Pricing ? Many owners? love to advertise poor items or good selling items with small discounts. Advertising has only one purpose. It is to bring customers into your store. You can go 75-90% off on a poor seller and will have little movement. Most customers will not consider an item on sale unless it is at least 20% off regular retail. Having a good seller at ? off could bring decent traffic to the store. Most customers who come in for the sale item will buy other items at full price. This is a difficult idea for many owners to discuss. Normally, the best ad prices are 20%, 50% or 75% off regular retail. Making signs for ? off will result in more sales than 50% off.

Had a couple of owners told me, if they wanted large discounts on their merchandise, they would not need a consultant. They could have done the markdowns themselves. It is ironic that both stores had severe cash flow problems and loads of old inventory. It would have been better for both of them to close their doors or go ? off their entire store. They did not realize that their customer count would continue to drop unless they changed their mind-set.

Old merchandise needs to be liquidated regularly. Inventory either makes you money or costs you money. Merchandising that is over a year old should be reduced to create space and cash for good selling items. You can use this cash to make profit by buying more good selling items.

Resistances to Change- Some owner?s have been doing their business for 10-50 years. Times have changed and owners must adapt. It is tough to run a successful business. New strategies are needed to be a viable business. Business as usual will result in the same poor results.

Here is a question about profits. Let?s say you order an item that is $10 cost and 10 per case ($100 Case). You have sold 5 of these at $20 each. How much profit have you made?

Most people would have said 5 items X $10 profit per item = $50. The better answer would be 0. You have made $100 revenue and your total costs were $100. Your profit will be from the sale from the last 5 items.

There is one last thing small businesses should do to help their sales. You cannot compete with the big boys in pricing. You need to have exceptional service and a liberal refund policy. Many businesses are afraid of being abused by refunds and hate to give them. If you have a liberal refund and use common sense, your profits will increase because of customers being more trustful of your company.

A consultant can help a struggling business. However, the consultant suggestions will not be effective without an owner following the advice 100%. Following all parts of a consultant plan will lead to increase profits and cash flow.

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