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Managing Working Capital

Owning a retail business is a little like riding a bike—there are going to be strenuous uphills, glorious downhills and demanding stretches in between. How you handle the ride is based on your ability to keep the wheels moving by combining judicious pedaling with knowing when to shift gears quickly and skillfully.

Imagine your retail business consists of two large wheels, much like a bicycle. As a retailer, the bicycle you ride is called the working capital cycle. Its two wheels are called the sales wheel and the working capital wheel.

The working capital cycle can get you where you want to go. To get there, and remain in control of your destination, you have to understand the basic components.