Friday, March 20, 2009

Spring hibernation.

I don't know if you could feel the 'acceptance' in yesterday's post, but that's how I'm feeling. I'm more or less in hibernation until summer arrives. Keeping the store humming along, without doing anything different.

Except the POS system, which will be, I think, a statement of my seriousness in going forward. It isn't cheap, and getting it to run right won't be cheap.

In the meantime, however, I don't believe there is much I can do to change the course of sales. Despite being down in sales to the levels I predicted going into the year, I'm still going to turn a small profit beyond overhead, which is pretty amazing considering I usually haven't been able to do that when sales where much, much higher.

It's all about the spending.

There are two temptations when sales decline: one is to keep spending money, in anticipation of the business turning around and picking up market share, and just flat out keeping up appearances. This is incredibly seductive, especially when it can actually be a break-even proposition to overspend. (That is, you earn just enough money to pay for the 'cost' of the extra product, even if you don't actually turn a profit.)

But this is dancing on the edge of a cliff, especially when trends are down, and when they are unpredictable. You expend your resources, and you leave yourself with no margin for error.

If you go down this path, you can easily start bleeding 10% per month for months on end, especially if, like most small businesses, there is a long lead time between ordering and arrival.

The other temptation is to spend no money at all.

Which is worse.

I try to identify levels which I can support, and then slightly undershoot them for a time to see what sales are really going to be like. Then spend up to the actual level of sales.

I prefer higher sales not just because of the revenues, but because of the activity. I could turn a profit on a very small store, but it would be kind of dispiriting.

I think the level of sales right now is right on the border of that; fortunately, we are halfway to summer, so I'm feeling like I can start to relax a little.

No comments: