Southern Jewelry News
  • Featured
    • All
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Sponsored Content
    • Supplier Spotlight
    Lambrecht’s Jewelers, 130-years-old and counting
    Celebrate with Gold®
    Tracing Diamond’s Origin
    Pickens, Inc.: Steady pace wins the race
  • Latest News
    • All
    • COVID-19
    • Furry Friends
    • Industry Awards
    • Industry Events
    • NRF
    • On The Move
    • Other News
    • Tradeshow News
    • Video
    • What's New
    Stuller introduces several new offerings at JCK Las Vegas
    JSA reports crimes against U.S. jewelry firms in 2021 exceeded pre-Covid levels
    GCAL partners with VDB to add 8X® Cut Grade search filter
    Registration opens for HardRock Summit 2022
  • Podcast
  • Columnists
    The Retailer’s Perspective: With great power comes great fails
    The Retailer’s Perspective
    The Story Behind the Stone: Yearning for Kazakhstan
    10 Cybersecurity Questions small and medium businesses should ask in 2022
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part III
    Kate’s star-studded style. What will the next trend be?
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part II
    Retailing in a post-PC world
    Motivating your sales staff
    IAS Training’s Keys to Communication
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription
No Result
View All Result
Southern Jewelry News
  • Featured
    • All
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Sponsored Content
    • Supplier Spotlight
    Lambrecht’s Jewelers, 130-years-old and counting
    Celebrate with Gold®
    Tracing Diamond’s Origin
    Pickens, Inc.: Steady pace wins the race
  • Latest News
    • All
    • COVID-19
    • Furry Friends
    • Industry Awards
    • Industry Events
    • NRF
    • On The Move
    • Other News
    • Tradeshow News
    • Video
    • What's New
    Stuller introduces several new offerings at JCK Las Vegas
    JSA reports crimes against U.S. jewelry firms in 2021 exceeded pre-Covid levels
    GCAL partners with VDB to add 8X® Cut Grade search filter
    Registration opens for HardRock Summit 2022
  • Podcast
  • Columnists
    The Retailer’s Perspective: With great power comes great fails
    The Retailer’s Perspective
    The Story Behind the Stone: Yearning for Kazakhstan
    10 Cybersecurity Questions small and medium businesses should ask in 2022
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part III
    Kate’s star-studded style. What will the next trend be?
    Motivating your sales staff
    IAS Training’s Keys to Effective Communication – Part II
    Retailing in a post-PC world
    Motivating your sales staff
    IAS Training’s Keys to Communication
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription
No Result
View All Result
Southern Jewelry News
No Result
View All Result
Home Columnists

How to make the most of your December business

David Brown by David Brown
January 26, 2015
Share on FacebookShare on Twitter

So the holiday season is over, the hard work is done and it’s time to take a well earned break – and why not? You deserve it.

January can be the best time to take a break from your business – it is also the time when you can reap the most benefits. It’s a little like farming – you’ve got the hay in the barn, but you need to make sure it gets used wisely or it has a habit of disappearing by itself!

One of the biggest problems that many store owners have is their level of debt – they invariably spend most of the year owing money and most of the year seeing their debt levels rising. The exception to this is the New Year when business has been strong relative to the rest of the year. The average store will do 20-25% of their sales in December with only a limited increase in their overhead costs, mainly staff. It’s not hard to have more money in the bank at the end of December than you had at the start – it’s what you do with it that matters.

Given the significance of this period on overall performance it’s important to take time to assess how you will use these funds. Unfortunately we find most stores tend to loosen the purse strings and just reinvest in inventory until they run out of money again – the result? More inventory than they had in November.

An interesting exercise is to take your bank balance at the 1st of January and deduct the amount owing for your December creditors and see what you have left. Compare this to the same situation during a selection of normal months during the year (look back at February, March and April the previous year as an example and average the results).

What you should find is that you will have surplus cash compared to your normal months. Let’s give an example:

Jack has $150,000 cash in the bank on January 1st. He owes $70,000 for his December invoices. This means a cash surplus after paying December’s amounts of $80,000.

He compares this to the months of February, March and April the previous year:

  Feb Mar April
Cash balance 1st month $30000 $10000 $20000
Previous months accounts owing $40000 $25000  $35000
Cash left after paying accounts -$10000 -$15000 -$15000

Clearly from this example Jack is running short of cash in a typical month by an average of $13333 (-$10000-$15000-$15000 / 3 months). This is not accumulative as he has more cash arriving in before he has to pay his accounts – but he is effectively living hand to mouth and could do with a buffer.

So what about that surplus of $80000 after paying off December’s accounts? Jack knows that the previous year he averaged a deficit of around $13,000 for that time of year, so all things being equal he may need to try and allow for this rather than pay last months accounts from next months sales.

We’ll allow $20,000 to be safe. Removing the $20,000 buffer leaves $60,000 in surplus cash. Does Jack need to replenish his inventory? No, he is diligent at sending reorders and has largely replenished his December product as he has gone along, but will keep a further $20,000 to top up those things that he hasn’t reordered yet. (If Jack didn’t reorder religiously he would need to replace much of his December product, but then he would have considerably less in December invoices to pay, and much more cash, because he had made fewer December purchases).

After keeping his $20,000 safety net and allowing $20,000 to replenish product Jack is left with $40,000. The key question that will shape the balance of his year is how will he use this money?

Now I want to emphasize this exercise is very basic and I wouldn’t recommend using it in place of a full cash flow model, there are other factors affecting cash flow and we have oversimplified it for the purposes of the exercise – but as a quick calculation using fingers and thumbs it can be invaluable to helping you make a conscious decision – how will I use my December windfall before it disappears of it’s own free will?

You may choose to invest it in new product, repay debt, take a holiday or whatever – you may finish up making the same decisions as you do every other year when you haven’t really thought about it… but the difference this time is you will make a conscious choice.

If you are unconscious about money it will soon leave you like water from a sieve. Take the time to choose how you use your cash during the time when you have the most of it and it can help revolutionize your business.


David Brown is President of the Edge Retail Academy, an organization devoted to the ongoing measurement and growth of jewelry store performance and profitability. For further information about the Academy’s management mentoring and industry benchmarking reports contact inquiries@edgeretailacademy.com or call 877-569-8657.

David Brown

David Brown

David is the President of The Edge Retail Academy (sister company of The Edge). They provide expert consulting services to help with all facets of business including inventory management, staffing, sales techniques, financial growth, retirement planning, etc. – all custom-tailored to your store’s needs. Utilize the power of The Edge, to analyze major Key Performance Indicators that point to your store’s current challenges and future opportunities.  Edge Pulse is the ideal add-on to the Edge, to better understand critical sales and inventory data to improve business profitability.  It benchmarks your store against 1100+ other Edge Users to ensure you stay on top of market trends. For more information call 877-569-8657, ext. 1,  e-mail Inquiries@EdgeRetailAcademy.com  or  visit www.edgeretailacademy.com.

Related Posts

The Retailer’s Perspective: With great power comes great fails

The Retailer’s Perspective

June 30, 2022

The Story Behind the Stone: Yearning for Kazakhstan

June 30, 2022

10 Cybersecurity Questions small and medium businesses should ask in 2022

June 27, 2022
Motivating your sales staff

IAS Training’s Keys to Effective Communication – Part III

June 22, 2022

Latest News

Industry Events

Stuller introduces several new offerings at JCK Las Vegas

July 4, 2022
Other News

JSA reports crimes against U.S. jewelry firms in 2021 exceeded pre-Covid levels

July 4, 2022
On The Move

GCAL partners with VDB to add 8X® Cut Grade search filter

July 4, 2022

Other News

Registration opens for HardRock Summit 2022

NRF says economy is slowing but recession is unlikely in near term

American Gem Society targets negotiation skills for Confluence 2022

Lambrecht’s Jewelers, 130-years-old and counting

Celebrate with Gold®

Tracing Diamond’s Origin

Southern Jewelry News

© 2022 Southern Jewelry News.

Additional Information

  • About
  • 2022 Trade Shows
  • Media Kit
  • Contact

Get Social with Us

No Result
View All Result
  • Featured Articles
    • Featured
    • Featured Retailers
    • Retailer Roundtable
    • Supplier Spotlight
    • Sponsored Content
  • Latest News
    • What’s New
    • Industry Events
    • Tradeshow News
    • On The Move
    • Other News
    • Furry Friends
  • Columnists
  • Classifieds
  • Subscriptions
    • Newsletter Signup
    • Print Subscription

© 2022 Southern Jewelry News.