Trade Fairs are coming up and wholesalers/manufacturers are spending tens of thousands of dollars gearing up to do exactly what you are in business to do...make sales. This includes previewing new designs and ranges. Now, most of you have been attending a trade show for years so you know what they are about, but what could you do differently to achieve even more business success when it comes to this type of buying event?
Firstly, you need to attend trade shows for a number of reasons.
1 - You really need to attend trade fairs to see what is new, and to make decisions on new lines as well as new designs and new trends. Your staff like to have new lines to sell and your customers like to see exciting new things. Equally important, your image is impacted by what you decide at trade shows. Do you buy (hence market) old and mature (staid), head for young and trendy, branded vs non-branded new lines, low-end volume lines, or move more upmarket. If it's time to upgrade your image, a trade fair is a must for you. There nothing more infuriating than losing a brand because your competitor attended the trade fair and signed it up.
2 – It’s good to renew a relationship with the principals of the firms you do business with. Take time to talk about changes in trading conditions (maybe memo deals, exchange of some old stock, etc.) and catch up with “what’s happening” with their company.
3 – Of course I would be remiss if I did not mention the valuable exchanges of information around the bar in the evenings.
Having said this, my experience shows retailers make the same mistakes year after year after year - mistakes that create stress when it comes to paying for their purchases. I have often jokingly said to retailer friends, “If you could sell as well as you buy, your sales would double.”
To make the most of a trade fair takes pre-planning.
First up, (because it is the most important), what is your budget? How much do you not want to overspend (remember last year paying for your excess Christmas purchases in January, February and March? All suppliers want you to spend with them, but also they need to be paid, so a budget is necessary. More important than having a budget, is sticking to the budget. Keep a percentage of your budget for lines you had not even thought of before the trade fair.
How to do a budget:
If your computer system creates an “Open to Buy” then use this. If not, then rough out a figure by:
- Adding together last November and December Cost of Sales.
- Then add or deduct a percentage increase based on how sales are so far this year over last year.
- Then add or deduct any planned stock increase or reduction (are you overstocked at present against the same time last year).
- Now allow a percentage of this COST OF SALES fund to replace fast sellers, pay for special orders, pay for repairs.
Your rough budget should look something like this
November and December 2015 Cost of Sales 200,000
Sales increase this year 5% 10,000
Stock reduction 10% ( 20,000)
Less Fast Sellers Replacement 50% ( 80,000)
Less Repairs at 10% of business ( 20,000)
Less allowance for Special Orders 8% of 210,000 ( 16,800)
LEAVES AN OPEN TO BUY FOR TRADE FAIR 73,200
Now… when you look at an estimated Cost of Sales for November and December being $210,000 and you have only $73,200 you might well ask “Why is the Open to Buy Budget is so low at only 35% of the total Cost of Sales of $210,000?”
AND THIS QUESTION TELLS IT ALL…
In years gone by, retailers with no budget were spending based on emotion (“I know we can sell this”) and in many cases they are correct, but just look at their shelves to see how much of last Christmas and the previous year’s Christmas over buying is still sitting in the store. As I often say, “You can’t have money sitting in the bank when it is sitting on your shelves.”
Having a budget and sticking to it is the only way you will avoid the “tons of money sitting in the bank on the 26th December and none at the 26th January, with you spending the first 3 to 4 months of the year having all your cash flow being sucked up for paying suppliers for your Christmas overbuying.
- List in order of importance to you, the suppliers you want to visit, then stick to it.
- List potential new lines or brands you want to look at.
- Plan your time at the trade fair so you don't become the jeweler who turns up at closing time after wandering around and achieving nothing.
- As they say, failing to plan is planning to fail.
If you do the above it won’t take long but it will make you think, and hopefully, you will have some good cash left in January to enjoy a well-earned holiday.