Problem solver: 'I lie awake at night and worry that I will not be able to pay my suppliers'
Businessman Feargal Quinn answers your questions
Q: I am at my wits' end. I run a cafe and my cash flow is so tight that often I lie awake at night worrying if I will have enough money to pay my suppliers the next day. Is there any advice you can give me?
A: This is a difficult place to be and I can only imagine the stress you must be going through. I can't be sure from your email what steps you have taken to try and help things improve so I will cover several possibilities for you to explore. Usually solving cash flow problems revolves around a number of different areas and there is never one single solution.
Start by preparing a sales business plan. Sit down and work out all of the steps you will need to take over the coming months to get the business back on the right footing. Include cash flow, profit and loss, and balance sheet projections, with which your accountant will probably have to help you. Then head off to your bank and present them with your plan and see if they can assist you with either an overdraft facility or a loan that will be serviced from the new improved business model (there is a misconception out there that banks are not lending or providing overdrafts and I have found recently more businesses succeeding in this area).
Look at the way you are paying your suppliers and see if your long-term suppliers would be willing to go on to extended credit terms which would also help to ease your cash flow. I am sure you have taken lots of steps to ensure that your overheads and expenditure have been minimalised but if you haven't, do a root and branch review of all the outgoings you have and question if they are all necessary.
Next you need to start looking at driving your sales upwards through local initiatives designed to increase the traffic flow. Consider extending opening hours, put in a loyalty scheme to reward regular customers, remind local businesses that you exist, etc. Move your sales up slowly to avoid putting further pressure on the cash flow.
One other check you might do is to look afresh at the cost you are paying for products. You may find that you are paying too much for some of the products you are buying which will mean you are not getting the correct margin, thus further exaggerating the problem.
I would be confident you can get yourself out of the current situation and, most importantly, you must have self belief that you can. That will give you the energy and enthusiasm to keep going.
Q: I run a garage and a small shop in the west of Ireland. Neither the garage nor the shop are part of any national forecourt brands. Our sales are good but I am wondering if it's time to become part of one of the bigger networks. We are profitable.
A: Well done! It is refreshing to hear from a truly independent retailer who has carved out a local business for themselves. I have no doubt people are buying fuel and shopping with you because of the standards, etc, you have put in place. The photograph accompanying your email suggests you are running a very professional operation on a par with any of the national brands.
My initial reaction would be "why change anything". Keep evolving and improving the business and develop a strong sales growth plan to ensure there is continuous evolution in the development of the business.
You need to take a moment to explore the benefits of joining one of the symbol group retailers or forecourt fuel operators and having their name over the door. It is really all about brand recognition and when customers see that brand name, they know what to expect. The other big benefit from being with one of the larger groups of course is their buying power. Usually you can get better commercial deals due to the combined buying power of the overall group, which is very important in today's environment and allows you to offer competitive prices on promotional activity.
On the branding front, consumers seem to trust you and are using your business in large numbers every week so that doesn't seem to be a big issue for you. What you will have to question is whether you feel you are competitive enough on both your fuel and food prices and that you are not getting lots of customer complaints about your pricing being out of line. If your pricing is competitive, then you will find it difficult to find a compelling reason to look at the national groups.
The last piece of advice I would give you is to go out into the market place in another county or region and talk to some of the other operators about their experiences with the national brands. That would be an excellent source of information and would help you to weigh up the pros and cons of the decision.