How retailers and entrepreneurs can take control of their finances and get out of debt.

The retail sector has undergone major changes in recent years. Retailers have had to deal with rising costs, changing consumer behavior and the rise of e-commerce. In addition, many entrepreneurs in the retail sector are dealing with debts as a result of the corona period and increasing fixed costs. How do you ensure that you, as a retailer, regain control of your finances and how can you structurally get out of debt? In this blog, we discuss the causes of financial problems in the retail sector and provide practical tips to make your retail business financially healthy again.

Common Causes of Financial Problems in Retail

Retailers and merchants face specific financial challenges that put pressure on their cash flow.

• High rental costs
  Physical stores are often located in expensive locations, where rents are high and costs are a heavy burden, especially when sales decline.

• Rising energy costs
  Shops need lighting, heating or cooling, and energy bills have risen sharply in recent years.

• Declining customer numbers
  Online shopping and changing consumer behavior have caused sales at many physical stores to decline, making it more difficult to cover fixed costs.

• Inventory management and obsolete inventory
  Products that don't sell mean tied up capital and less liquidity to purchase new, better-selling products.

• Competition from online stores
  Large web shops such as Bol.com and Amazon compete strongly on price, which makes it difficult for smaller retailers to maintain sufficient margins.

• High personnel costs
  Retailers who depend on staff are faced with rising wage costs, mainly due to higher minimum wages and collective labor agreement obligations.

All of these factors can contribute to a situation where debts pile up and it becomes increasingly difficult to meet your financial obligations.

Map out your financial situation

To get out of debt, it is necessary to have a clear overview of your finances.

• Make an overview of all your debts
  Which invoices are still outstanding? Do you have payment arrears with suppliers, the tax authorities or the landlord?

• Analyze your cash flow
  How much turnover comes in monthly and what fixed costs need to be paid? By making this clear, you can draw up a plan.

• Take inventory of your stock
  Are there products that are difficult to sell? See if you can still sell them with discounts to free up liquidity.

• Assess your profitability by product or category
  Are there product groups with low margins that you would be better off eliminating?

By making these analyses, you know exactly where you stand and where you can intervene most quickly.

Reduce costs and optimize revenues

To get out of debt, you need to ensure a better balance between income and expenses.

• Negotiate rent and fixed costs

  • Discuss with your landlord whether there is room for rent reduction or installment payments.
  • See if you can save energy by using more economical lighting and equipment.

• Smarter inventory management

  • Avoid overstock by purchasing smaller quantities and ordering more often.
  • Sell ​​slow-moving inventory through clearance sales, marketplaces or bundle deals.

• Increase your margins

  • Look for products with higher profit margins and give them extra attention in your store or webshop.
  • Investigate whether you can add a service or experience that will set you apart from your online competitors.

• Make use of subsidies and schemes

  • Check whether you qualify for tax benefits or financing schemes for innovation and sustainability.

By applying these measures intelligently, you can relieve financial pressure and create a healthier foundation.

Discuss payment arrangements with creditors

If you have already built up debts, it is important to make payment arrangements on time.

• Suppliers: Ask if you can pay your outstanding invoices in installments.
• Landlord: Check whether a temporary rent reduction or a payment plan is possible.
• Tax authorities: Use a payment plan to pay off outstanding VAT and payroll tax debts in installments.
• Bank or lender: Discuss options for loan refinancing or temporary deferral of repayments.

Many creditors are willing to think along with you if you enter into discussions in time and make a realistic proposal.

Seek professional help

When the financial problems become too great, it may be wise to consult a debt counselor or financial advisor.

• Structuring debts: An expert will help you prioritize debts and draw up a realistic repayment plan.
• Negotiating with creditors: Debt counselors have experience in discussing payment arrangements with landlords, the tax authorities and other creditors.
• Restart or business restructuring: If a reorganization is necessary to become financially healthy, an expert can provide guidance.

By seeking help in a timely manner, you increase the chance that your company can continue to exist and become profitable again.

Request help

Do you recognize yourself in (part of) this situation and do you no longer want to walk around with worries? We are ready to help you. Do not wait until the problems escalate and take control of your financial future today. Click on the button 'Request debt assistance now' and take the first, important step towards peace and security for you and your company.