Consider the independent store owner reaching retirement age. It’s been thirty years of hard work, long hours, many weekends, most holidays, and while the business hasn’t made him wealthy by Wall Street standards, it’s been enough to pay off the mortgage, send the kids to college and keep a late model car in the garage. For years, his wife wanted to vacation in Hawaii. He could afford the trip - but he owns an independent jewelry store. Who has time for a trip like that? Even in the summer months when things were slow there were always things to do: inventory to buy; repair work to be done; some custom design jobs for demanding clients. So his wife stopped talking about Hawaii; they went to the trade show in Vegas instead and saw David Copperfield.
Now approaching 65, our store owner is thinking more about retirement, but he postpones the decision, year-after-year. Almost unconsciously he lets his inventory dwindle down. In these tough times he’s reluctant to go out and spend money on new merchandise, so what he has gradually becomes old and unwanted. Customer traffic begins to slow down. The store just isn’t what is used to be thirty years ago. Nobody has told our store owner that the time to retire is before you need to retire.
Many owners hold on to their stores and miss the optimum window of opportunity to turn their inventory and customer good will into what could be a nice retirement nest egg. For some, the long hours and dedication needed to start and build a business turned into everything they have and they have a tough time letting go. Then the unexpected happens. A sudden heart attack, cancer, a new competitor, maybe a big box store, comes into town and floods the market with national advertising and steep discounts. The economy fails, and sales take a significant dip. Still, our store owner decides to ride it out, tries to hold on one more year, hoping things will miraculously turn around. That doesn’t happen, and at last he decides it’s time to retire. Now what?
Of course selling the store is an option, but the major difficulty with this strategy is the lack of qualified buyers. Our store owner consults with his CPA to discuss his situation. The CPA points out that many buyers who might be interested do not have adequate financing and may want the owner to hold a note. The note may become useless if the new owner does not run a successful operation, meaning the original owner will never get paid.
This is not the news our store owner wants to hear. He makes a few phone calls and puts the word out on the street to a few sales reps that he is thinking about retiring. The phone starts to ring and a few offers to buy his inventory come floating in: they average about 30 cents on the dollar. Opportunist wholesale buyers start to circle the store owner like hungry vultures who have just discovered road kill. Rumors start to fly and one day one of his best customers walks in and asks if he is going out of business. The owner’s blood pressure shoots through the roof. Someone should have told him years before that the time to retire is before you need to retire.
There is a solution. It doesn’t have to be this way. Choose the right time to retire when your store is still doing well, when there is still an abundance of inventory and customer good will. Plan well in advance to run a professionally conducted retirement or store closing sale and you’ll be able to generate as much as 1.25 on the dollar for inventory and achieve close to your annual volume in as little as 8 to 10 weeks. With a well planned retirement sale you have the opportunity to convert all that customer good will you’ve built up throughout the years into cash.
With a retirement sale you only get one shot at success. It’s extremely important to maximize this once-in-a-lifetime business opportunity and to do some advance planning. For example, you must take time to make sure you are in compliance with both state and county laws regarding store closing sale events. These statutes regulate such things as the maximum length of time an owner can run a store closing sale and the ability to bring in or augment inventory during the sale.
Making sure you have enough inventory in stock to last throughout the sale is critical. Your retirement sale will draw in many people who are not your normal customers. You may stock up on merchandise you’ve never carried before. Make sure you have all price points covered.
Advertising and marketing will play a critical role in the success of your retirement sale. You will want to reach out and appeal directly to your loyal customer base offering private sale incentives to them as a reward for their patronage over the years. Having an updated mailing list is an essential. Beyond your loyal base of customers you’ve got to get the word out about your sale and the discount savings available to the general public. Every market is different. You must determine the most cost effective means of advertising in your particular market. Appropriate signage in your store window and in-store sale signage is also vital. If you are in a mall, there may be restrictions as to what you can advertise in your store window.
Planning for your retirement and closing your store requires advance thought and planning, but the starting point is to make a decision that it’s time. Make that decision, start the planning process and then start thinking about all the things you’ve always wanted to do but never had the time. Lanikai Beach, on the island of Oahu, is considered by many locals to be the most beautiful beach in all of Hawaii. Make sure your store sale is set up for success and enjoy your well-earned retirement.
Bob Epstein is CEO of Silverman Consultants. Offering a legacy in sales strategies for jewelers since 1945, Silverman provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, SC; New York City; and Saskatoon, Canada; the company helps jewelry store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information, visit www.silvermanconsultants.com or call Bob direct at 800-347-1500.