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At last good news for retailers

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Friday February 25, 2011 at 10:00am

It was great to read a positive report about the state of the retail market last week on the Retail Gazette website. Their report suggests that the UK retail sector has got off to a healthy start in 2011. Apparently year on year sales for January were up 9.1 per cent for the sector as a whole, with online retailers showing an increase of an impressive 49 per cent.

So maybe the predicted impact of the increase in VAT to 20 per cent won’t hit as hard?

These figures did set me thinking however about the challenges that retailers in our local patch, in Birmingham, face. For the small independent retailer there’s the obvious challenge from the big global brands – that’s true whether you are selling fruit and veg, or fashion items. But there are also the challenges common to other small business owners; trying to plan for the future whilst taking care of day-to-day business demands, keeping cash flowing, avoiding bad debts and recruiting good quality people.

So here are my top 5 tips for retailers who want to take advantage of a positive start to the year and avoid nasty surprises as we move further into 2011:

  1. Set out a business plan for the year. This doesn’t have to be long and complex but it should contain some clear business and financial goals. Being clear on what you want to achieve in the year is a great way to motivate yourself and others in your business.
  2. Put together a cash flow forecast. Small businesses the world over fail, not because they don’t have a good product or enough customers, but often because they run out of cash. A cash flow forecast is a simple management tool that will help you understand how much cash you have and are due to have in your business. 
  3. As we approach the end of the tax year (and the end of the trading year for many businesses), consider revaluing stock. By revaluing to the current realisable value you may be able to reduce tax liabilities.
  4. If you own your retail premises consider the options available to place the property in a pension fund, with significant tax saving benefits. 
  5. Negotiate payment terms with suppliers – look for extensions of credit, discounts and the like. It all helps when it comes to cash flow.

Let’s hope growth continues for the retail sector, especially our local independents in Birmingham.

Andy Parker
Chartered Accountant in Birmingham

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