How to Increase Your Cash Flow by 25 Percent—Starting Next Week
Between them, Bob Popyk and Alan Friedman have 85-plus years of experience in the music industry, as business owners, retail sales and financial consultants, music trade magazine columnists and musicians. At 2017 Summer NAMM, Popyk and Friedman teamed up to offer their best ideas for increasing cash flow right away.
Here are their top tips. (Watch the video for the full session.)
1. Sit down with your staff. Popyk shared that very few retail staff ask him to buy when he walks into music stores as a customer. A former music retailer himself, Popyk learned that he needed to help his staff set goals and polish their sales skills. He advised making sure your salespeople are asking customers to buy. Identify what instruments you want to push, get staff involved and consider offering them a bonus. Keep them wanting to work.
2. Blow out old stuff. Friedman stated that buying and selling product is a game of educated guessing, and inevitably, you’ll make a bad buy. Don’t beat yourself up. Recognize your buying mistake as soon as you can, and blow that product out. Think in terms of turning product in 30, 60, 90 and not more than 120 days. You have control over selling product faster by merchandising better or buying less. Friedman recommended only buying product you know you can move in less than 120 days. Get rid of product that’s been sitting for up to nine months to a year, even if it means taking a loss. That frees up your cash flow to buy what you know you will move in 30–90 days and turn back into cash. The worst thing to do is have your dollars tied up in aging inventory—you lose out on opportunities. Put old product on sale, host an event, use eBay or offer spiffs. Shrinking your inventory will generate cash.
3. Ask your supplier(s) for help. Always keep lines of communication open with suppliers, and they’ll usually work with you.
4. Ask your customers. Popyk urged retailers to ask people if they know of anyone who would appreciate an instrument. He advised picking up the phone and asking customers, “Who do you know who would want one of these?” For Popyk, it works. Most customers will give you a name. Popyk reminded retailers to call past customers, too.
5. Be creative with eBay, Reverb and Craigslist. Friedman stated that he believes you can get fair market value for instruments using online selling platforms, such as Reverb, eBay and Craigslist. Get what you can to move inventory, generate cash, and get into newer goods. Popyk shared that he used eBay by placing an ad titled “Illness forces sale” and sold his instrument within an hour. His point was to be creative, get the phone to ring and get people in your store.
6. Send out thank you notes. Popyk recommended sending out handwritten thank you cards to customers. And it doesn’t end there. Follow up with a call, asking them to come back in and bring their friends.
7. Host a clinic. Friedman shared that he loves clinics, and there’s nothing more powerful than seeing a musician play an instrument. Popyk reminded retailers to get salespeople in tune to sell, too. Invite local groups to perform (for a donation to their favorite charities), and generate media coverage. The idea is to get people through the door.
8. Make it easy to buy. Friedman shared a personal story about buying a piano because the retailer offered customer financing, making it possible for him to purchase at the time. According to Friedman and Popyk, customer financing moves product. Popyk advised getting customers sitting down and comfortable before you talk financing.
9. Bundle it. Popyk suggested providing add-ons to give customers incentive to buy now. Add items they may not think of, such as print music, lessons, gear, strings or drumsticks, depending on what you sell. Get them to buy today!
10. These are difficult times. Friedman commented that music retail has always been competitive; the most important thing you can do is sell and take care of your customers. The second most important thing is inventory control and expense management. Popyk advised doing what your competitors are not doing and finding interesting ways to attract customers. He added that how you view your business is critical. Do you see “Opportunity is Now Here,” or do you see, “Opportunity is Nowhere”?