When you’re running a jewelry store, it’s easy to get swept up in the day to day—the new collections, the custom pieces, the excited customers walking out with something special. But behind all that shine, there’s something far less glamorous that quietly decides whether your business thrives or stumbles: cash flow.
By David Brown (originally published by Instore Magazine)
David Brown is the Co-Founder and Chairman of Edge Retail Academy, the leading jewelry business coaching and data aggregation firm, who provide expert business improvement plans, to help with all facets of your business including improved financials, healthier inventory, sales growth, increased staff performance, recruiting, and retirement/succession planning ... All custom-tailored to your company’s needs.
What Cash Flow Really Means
Cash flow is simply the movement of money in and out of your business. It tells you how much cash is actually available to cover your day-to-day needs—things like buying inventory, paying your staff, covering rent, keeping the lights on, and handling surprise expenses that always seem to pop up at the worst possible time. It’s about more than just bank balances. Your current account might show you where you are now but not where you’ll be in the next few weeks.Cash Flow vs. Profit: Where Jewelers Get Tripped Up
A lot of business owners confuse cash flow with profit, and that’s where trouble starts. Profit is what’s left after you subtract all your expenses from your revenue. It looks great on paper and makes you feel like your business is succeeding...and it is. But profit doesn’t tell you whether you have money available when you need it. You can be profitable and still crash your business if your cash flow is out of sync.Timing Matters More Than You Think
Profit is about alignment - matching the sale of an item to the cost of buying it and the associated costs of selling it. This doesn’t mean those costs happen simultaneously. You might have bought the item in April, paid for it in May - the sale could happen in August with the funds being received in September. The profit might all be happening in August, but the money can be going in and out at a much different time.When Cash Flow Breaks Down, Everything Feels It
Cash shortages don’t care how successful you feel. They can completely undo an otherwise healthy business. You’ve probably heard stories of stores that seemed busy and thriving but ended up closing because they couldn’t cover short-term obligations. That usually comes down to cash flow. When you can’t pay vendors on time, you risk losing preferred pricing or inventory access. When you can’t pay staff, you risk losing good people. And if you can’t keep enough stock in the display cases, customers notice—and they walk.Three Practical Ways to Stay Ahead of Cash Flow Problems
The good news is that with a little attention and consistency, you can stay ahead of cash flow problems.- Start by tracking your inflows and outflows weekly, not just monthly. Jewelry inventory is expensive and often purchased upfront, so knowing when large orders are coming and matching them with expected income is crucial. Forecasting helps you anticipate slow periods—maybe after the holidays or mid-summer—and make smart decisions about buying, staffing, and promotions.
- Set aside a cash buffer for emergencies. Even a small cushion can save you from stress when something unexpected hits, like a sudden repair, a late shipment, or a slow sales week.
- Get expert advice. Your CPA or management coach can give you the tools to stay on top of what’s happening. Your expertise is jewelry. Get help in areas where you feel you lack knowledge.
By David Brown (originally published by Instore Magazine)
David Brown is the Co-Founder and Chairman of Edge Retail Academy, the leading jewelry business coaching and data aggregation firm, who provide expert business improvement plans, to help with all facets of your business including improved financials, healthier inventory, sales growth, increased staff performance, recruiting, and retirement/succession planning ... All custom-tailored to your company’s needs.