How do I check an embroidery shop’s cash flow during its slow months?

Embroidery tends to peak around team seasons, holidays and event orders, so the quiet months show how sturdy the shop is. Ask for month-by-month records and mark the low points. Compare income against fixed costs such as rent, wages and equipment payments. A yearly total can look healthy while individual months run short.

Next, ask how the owner got through those months. Did suppliers wait for payment, did the owner skip a paycheque, or was a line of credit used? Look at inventory purchases ahead of busy periods, since they pull cash out early. Check accrual versus cash records so deposits and unfilled orders are understood. Check how the shop treats deposits received before work is done. Cash that arrives in advance can make a quiet month look better than it really was.

Finally, build your own plan for a slow stretch. Ask whether the shop has slow-season work, such as corporate orders, that smooths the year. Your accountant can prepare a forecast and show how much working cash a new owner might need on hand, and your lender can say what they would expect. Keep your own notes on every month that looks unusual, and raise them with the seller.

Key takeaways

• Review month-by-month records, and mark the weakest months.
• Ask how the owner covered the gap: credit, delayed bills or lower pay.
• Forecast a slow stretch before you commit.
• Check accrual and cash records for deposits received before work is done.