Capitalising on renovations or equipment investments

Renovating your store or investing in clothing and textile manufacturing equipment is a major investment for your business. Mathew Nolan shares some sound advice on surviving, and capitalising, on store renovations and machinery upgrades.

The fashion industry is all about making an impression, so there's nothing like a shop face lift to boost sales and reignite customer interest in your clothing. For manufacturers, the purchase of new plant and equipment can also have a marked impact on production capabilities.

But revamping the store or upgrading equipment can be a bittersweet time for retailers and manufacturers, as sales or production are usually hit hard before they climb. There can be weeks or months of disruption to cope with, and this is the time when cash flow can run dry.

Re-fitting your retail outlet or upgrading production machinery requires a significant financial, time and emotional commitment. So before you call in the shop fitters or start shopping for new production machinery, think carefully about maximising on these investments.

Most importantly for retailers, you'll need to consider how to fund your store refurbishments in view of maintaining a healthy cashflow and continuing to procure stock, pay expenses - such as staffing - while servicing other debt commitments.

For clothing manufacturers the same applies when upgrading your plant and equipment. However, while purchasing a new press may enhance your production capabilities, consider whether you will have enough cash to source the additional raw material needed to make full use of the new machine?

The key to successfully financing a store re-fit or upgrading machinery is to be financially prepared. And developing a sound financial plan is a lot easier than you might think. Firstly, make every provision to ensure the cost of your new investment doesn't crimp your business' cash-flow.

There are a selection of financial products currently available that are geared to assist businesses during periods of growth, development or change.

Choices vary from overdrafts that are secured against your property to debtor finance that lends to manufacturers against their debtors - once the goods are sold, delivered and invoiced. Other options, such as inventory finance, are also available that allow you to finance the purchase of stock or raw material before they're sold, and align the repayments on the loan to receipts from your sales.

It's also important to maintain your relationships with your existing customer base, suppliers and staff during your store fit out or machinery upgrade. So plan the renovations to coincide with seasonally slower times; also see how you can match them with staff holidays. If you do have to close or halt production, keep all your customers informed, and use posters and other promotional material to let people know when you will re-open.