Just like a great party depends on a steady flow of champagne, liquor store success depends on a healthy flow of cash.
Cash flow is the heartbeat of your liquor store. It’s intertwined with how much you spend to keep your business afloat, how much money customers spend when they stop by, and how much profit you can generate.
In short, managing your liquor store cash flow is one of the biggest factors in your small business’ success.
That’s why we’ve created this quick guide to liquor store cash flow. We’ll walk you through what cash flow is, how to calculate it, and how to optimize it for maximum profitability. Cheers!
What Is Liquor Store Cash Flow?
Let’s start with the basics. Cash flow is the movement of cash in and out of your business. It includes the money you spend to lease your storefront, stock your shelves, and keep the lights on — as well as the money customers spend in your liquor store.
Cash flow has a major impact on whether or not your store is successful. If you spend more than you make, you’ll find yourself in a tough financial position. If you bring in more money than you spend, you’ll turn a healthy profit.
Related Read: Small Business Cash Flow Management: The Ultimate Guide
What Determines Liquor Store Cash Flow?
While cash flow might sound like a simple concept, there are several factors that determine your liquor store’s expenses and revenue. Let’s take a look at a few things that might impact your overall cash flow:
- Location: If you’re located on a busy street corner, your rent or purchase price might be higher, but you’re likely to have more foot traffic. On the other hand, you can get a larger, more remote location for less, but you’ll have fewer customers coming through your door.
- Product selection: If you sell rare, vintage wines, it will cost more to stock your store, but you can charge more per bottle. If you offer a wide selection of the most popular spirits, you can stock your shelves for less, but you’ll make a smaller profit from each sale.
- Pricing: What are your customers willing to pay? Depending on your location and product offerings, you can adjust your prices to meet your customers’ expectations while still turning a profit.
These are just a few examples of how your business model can affect your costs and income. Now, let’s explore a few ways to optimize your liquor store cash flow.
1. Keep Costs Under Control
When it comes to calculating liquor store cash flow, your expenses are a significant part of the equation.
Whether you’re still working on your business plan or you’re celebrating your store’s fifth anniversary, it’s never too late to take charge of your operating costs. If you don’t already know how much it costs to keep your liquor store open, start by making a list of your expenses.
Make sure to include payroll, utilities, inventory costs, point of sale (POS) software subscription, and payment processing fees.
If you’re just starting your liquor store journey, don’t forget about upfront costs like renovations, POS hardware, shelving, and liquor licensing fees.
Once you’ve calculated your costs, you can better understand your liquor store cash flow and make changes accordingly.
For example, if you notice that your utility bills seem high, you can work with your team to make sure all lights and faucets are turned off after closing. If your payment processing fees are rising, you can implement a dual pricing system, offering customers a discount when they use cash rather than a credit or debit card.
These small changes can add up, but you can only make them when you know what your operating costs look like.
2. Become a Liquor Inventory Management Pro
Healthy cash flow depends on a constant flow of inventory moving through your store. If bottles sit on your shelves for too long, you aren’t making sales. If they’re moving too quickly, you’ll experience costly stockouts.
Fortunately, managing your stock effectively can solve both of these problems and keep the revenue flowing. Here are three most important steps to take when overhauling your inventory management strategy:
- Invest in a POS system that monitors your stock levels in real time and streamlines the reordering and receiving processes.
- Determine your inventory turnover rate.
- Identify your bestselling and slowest-moving spirits, then adjust your selection to better meet your customers’ preferences.
By understanding how stock moves through your store, you can take control of your liquor store cash flow, stock your shelves with the right products in the right quantities, and boost your revenue.
3. Brush Up on Your Liquor Store Marketing Skills
Another critical factor that determines your liquor store cash flow is the size of your customer base. After all, if shoppers aren’t coming through your door, you aren’t making sales.
There are two key steps to growing your liquor store’s customer base through marketing. First, you need to expand your reach and attract new customers to your business. To accomplish this goal, you can build your store’s online presence, use social media to highlight your selection, and offer exciting promotions and discounts.
To turn one-time shoppers into loyal fans of your liquor store, continue offering top-notch customer service, and consider launching a loyalty program to reward them for choosing your business.
4. Continue Learning and Adapting
Optimizing your liquor store cash flow isn’t a ‘set it and forget it’ kind of project. Instead, you should keep a constant eye on your store’s expenses and revenues, making proactive decisions to protect your bottom line.
One of the best ways to stay flexible is by regularly reviewing your POS system’s sales reports. These reports offer a wealth of information, helping you understand your sales trends, customers’ shopping habits, and your store’s overall financial performance.
Equipped with these insights, you can adjust your inventory, pricing, and marketing strategies to stay ahead of the curve.
Maximize Your Liquor Store Cash Flow With Bottle POS
Running a profitable liquor store is more than a full time job — which is why you need the help of a powerful POS system.
The right POS solution can make monitoring your liquor store cash flow a breeze with features like real-time stock tracking, easy inventory reordering, and in-depth reports. If you’re looking for software with all those features and more, check out Bottle POS.
Along with the tools you need to streamline your operations and boost your profits, Bottle POS also gives you access to a team of liquor industry experts committed to the success of your small business.
See Bottle POS in action by scheduling your personalized demo today.
