By Howard Hubler
Sometimes in business school we learn the term “lazy dollars.” These are generally defined as dollars in overstocked and older inventory that can be returned. In a recession “cash is king.” You need to be ready to “bleed” a bit and have cash to replenish that you have lost. Now is the time that through inflation, your old merchandise may be worth more wholesale to the guy in another state who is short on merchandise. This way, you get cash, and those lazy dollars are taken care of.
Are you overstaffed for people that you needed when you were selling business out to the walls and maybe that selling period is over? Some of these non-productive people you might consider letting go while we are in a tight labor market, and they can recover with a new job. Likewise if you are in retail, are you advertising like you did the first of the year when business was pretty good? If so, is now the time to trim your sales? With the mixed bag of inflation and a potential recession, a certain amount of that advertising needs to be re-focused and cut way back.
High expenses and potential inflationary conditions will hit Hoosier businessmen and women, whether they are in retail or wholesale. The business environment is changing right under our feet. Have you made any real plans with your staff to adapt to this new business environment? As a person who has been through a few of these, I am already making preparations. To the new guy who’s had a business and thought he cheated the pandemic and has done well, he may think he doesn’t need to make any cost cutting plans. He may be in for a rough ride. My only advice on a teachable moment is to read up on your particular marketplace and make corresponding plans to sell in a new and more challenging environment.