It was good (as always) to read November’s Mo’gas column where he quite rightly pointed out that the typical petrol retailer isn’t competing with the likes of M&S or Waitrose. And that’s because, in effect, the customers using petrol stations do so because they have to - and that therefore this industry shouldn’t suffer quite as much as some others during this economic winter. It would be even better if we could follow that up with some heartening figures to provide some relief in this season of good cheer. Unfortunately we can’t. Database is producing the worst figures in many years and there’s no sign of improvement.
Take fuel volume. We recorded 322,346 litres in September. That’s the lowest September figure since 1998 (when it was 317,240) and worse even than September 2000 when half the sites in the UK were out of fuel because of what, in those innocent bygone days, was called the fuel crisis.
Or look at shop sales, which were £52,692 for September. In simple cash terms it doesn’t look too awful, despite being the worst September figure since 2005. But then we have to acknowledge our old friend RPI (for years everyone’s assumed he was ’RIP’ but suddenly the old boy is bouncing up and down like a youngster again) and suddenly things look a bit grim. You have to go back to September 2001 to see a comparable ’real’ value of shop sales. How about shop GP then? In cash terms it was the worst September since 2005; in real terms the worst since 2001. All the indications are that we’ll see even worse figures before we see ’the green shoots of recovery’ (and if you can remember that phrase, then you’ll have lived through a similar period long ago).
The very fact that some retailers reading this will have experienced similar circumstances in living memory is proof that you can ride out the worst economic winters. To do so, you need to be efficient, ruthless and unsentimental and have your business under your control.
Start by protecting what you’ve already got. Your customers will be suffering in their own way; the last thing they’ll tolerate is any suggestion that they’re being ripped-off.
Protect your stock and your cash - know exactly how much stock you need to carry and keep an eye on where it’s going. If your shop is too big for repeated stock checks on your own, contact a firm of professional stocktakers; they can do a lot more for you than just count stock. When you know how much stock you’ve got you’ll know just how much of that precious commodity ’cash’ you’ve put out on the shelves. You’ll also know what sort of economic quantities of stock to order.
Protect your cash. Look at any local credit accounts you operate; what’s the balance due to you at this moment? What are the chances of actually collecting that balance? Credit control is essential. How long are your bank and card processors taking to put cleared funds into your working bank account? If it seems to be taking a week to get payments into your account, find out why.
Protect your cash. Till differences of £60 or £70 a month might have been ’acceptable’ a year or two back and less hassle than having to check each shift to the last penny and find who’s not doing their job properly. But £70 a month is £840 in a year. And that’s your £840. Enough to pay for your year-end accounts. But you can’t wait for your year-end to find out whether you’re still in business. Bring your management accounts right up to date. That means having December’s full trading, profit/loss and balance sheet reports during January. Modern online book-keeping systems are easy to use, can import data from other sources and can be processed into full financial reports very quickly. If you can’t put the figures together yourself, and can’t afford to put a permanent bookkeeper on the payroll, use a reputable accounting outsource provider.
The people who’ve survived previous economic winters learned these lessons years ago, and have a head start on the rest. For those who haven’t been in business long enough but want to come out leaner and fitter for when spring comes, get help. You know where to start. Wishing all of you a prosperous New Year from all at EKW.