A business that has more money coming in than going out has positive cash flow. This balance of money is especially important for local retail businesses, like hobby game stores. 

At its base, cash flow ensures that a business has the money needed to cover expenses at any given time. Whereas revenue measures the money coming into a business, cash flow often reveals the financial health of a business. 

Having cash on-hand allows a business to pay for its employees, marketing, rent, and other important expenses. Without cash flow, businesses have to rely on credit cards or a line of credit. This is the clearest sign that increased cash flow is needed. Here are a few steps that hobby game stores can take to increase their cash flow. 

4 Steps to Increasing Cash Flow in a Retail Business

1. Make a Cash Flow Statement & Projection

A cash flow statement provides an accurate representation of how money currently flows through the business. There are cash flow statement templates a business can use to do this. 

With this information, the owner can create a cash flow projection, which tracks the projected and actual cash flow of a business. This information will allow a business to determine what areas of the business are impeding positive cash flow. 

2. Evaluate Inventory Management

Hobby game stores have a tendency to hold onto stock like no other retail business. This makes it all the more important for game store owners to be aware of which products sell quickly. In general, board games are harder to sell. While trading card games are fairly easy to sell. 

A major facet of cash flow is understanding what capital is tied up in inventory and, generally, for how long. This will allow the business to project incoming cash flow and plan accordingly. 

While it might look nice to have shelves of board games, that valuable real estate is mostly going to waste. The store may realize a smaller space is adequate, or shift the space to focus on events for the items (like Magic: The Gathering) that do sell. 

3. Low Operating Costs & Remove Unnecessary Spending

A business should determine the expenses that directly contribute to profit and minimize or eliminate any expenses that don’t. One area to consider is operating hours. All retail stores need to analyze what hours of the day they receive the most foot traffic. However, game stores also need to consider how events will affect this.

For example, a hobby game store might determine that Wednesday is an important day to be open because of comic books. This same game store might host events on Fridays and Saturdays. In order to reduce labor costs and account for slow traffic times, the store’s hours are:

• Wednesday: Noon - 6pm
• Thursday: Noon - 6pm
• Friday: Noon - 10pm
• Saturday: Noon - 10pm
• Sunday - Tuesday: Closed

In this case, the revenue from events and the products sold during events more than makes up for the slower days when the store is closed. This is just one example of how a store can review its operating costs and adjust accordingly. 

A hobby game store is often a place where the community gathers. Sometimes, the solution isn’t to eliminate a service but to offer it for a fair price instead. For hobby game stores this might look like offering monthly memberships that allow gamers to use the space at certain hours and days of the week. 

4. Review Profit Margins

Profit margin measures the ratio of profit to revenue in a business. A business that has a profit margin of 2.5 percent will generate $0.025 in net profit for every dollar of revenue. Increasing this profit margin will inevitably generate more cash flow. This process requires reviewing the products currently being sold. 

Retail stores commonly have a lower profit margin. However, hobby game stores have multiple opportunities to provide services with a higher profit margin. For example, the cost to produce events is relatively low. But the store can charge a fee per attending person. Therefore, this is a service with high profit margin potential.

Selling TCG singles, both online and in-store, is another high profit margin opportunity for hobby game stores. In fact, selling online in general is another way for retail store owners to increase their profit margins. 

Tools for Monitoring Cash Flow

BinderPOS provides game stores with all of the tools they need to sell products in-store and online. BinderPOS offers seamless channel integration in multiple languages and currencies. With the ability to manage events through a website and sell products directly on social media, the software provides direct opportunities to increase revenue.

For a retail store to increase cash flow, it must first have a clear picture of the business. BinderPOS makes it easy to review and adjust everything from marketing to pricing. With a massive library of features, let us help you sell more products, to more people, faster. Book a demo to get started.