Surviving January: Craft Store Cash Flow After the Holiday Crash

If your cash registers go quiet every January, and by February you’re starting to sweat, wondering where your next rent payment is going to come from, you’re not alone. Every January, most craft store owners face their biggest accounting and financial test of the year.

Retail sales dip across industries at the start of the new year, but craft stores see even steeper-than-average declines. While other stores can still rely on customers buying at least the bare necessities, crafting falls into a spending category that often gets cut first when people feel broke after all their holiday spending. 

January cash flow challenges can be stressful, but they’re predictable — which means they’re manageable. The craft store owners who survive the dreaded new year lull are the ones who plan ahead and implement the right strategies. In this post, we’ll cover some of the best ways to position your store for stronger cash flow all year. 

Understanding Craft Store Cash Flow Patterns After the Holidays

If you've been in the craft retail business for more than a year, you know the drill. 

In December, it feels like you're printing money. Customers buy yarn by the armload, fabric is flying off the bolts, and your registers are always busy. Then January 2nd hits, and it's like someone flipped a switch. 

Everyone is done making their holiday gifts, and they’re nursing credit card hangovers from their December generosity. You’ll get a bit of breathing room from any gift cards you sold in December, but the transition from the busy holiday season into the doldrums of January can throw even the most seasoned retailer for a loop.

Related Read: Managing a Craft Store: 7 Tips & Tools

The retailers who don’t plan ahead end up making critical errors at this time. They over-order spring inventory, keep holiday staffing levels out of habit, and fail to capitalize on the impulse buys that actually make your gift card float profitable.  If you want to thrive this coming January, you need to implement the right tricks and strategies. With this understanding in mind, let’s get started. 

Pre-January Planning

The thing about surviving January is that it’s not actually about January at all. Your January success depends on the planning you do in the months leading up to the dreaded post-holiday slump. 

Build Your Cash Cushion During Peak Season

You need to prepare for a slow January by taking advantage of your November and December sales. Instead of feeling flush with cash when those sales keep rolling in, think about it like a squirrel preparing for winter.  

Set aside 20-30% of your November-December profits specifically for January expenses. It’s always tempting to see the extra cash that comes from a holiday boost as a reward for your hard work, but think of it as paying your future self. 

Create a completely separate "January survival fund" and funnel cash into that account during your peak season. We recommend opening a second business savings account for it because then the money isn’t sitting in your main business account, and you won't accidentally spend it on new inventory or equipment.

The key is understanding your break-even point for slow months. What's the absolute minimum you need to keep the lights on, pay rent, and cover basic staffing? Most craft store owners are surprised to learn they can operate on much less than they think, but only if they plan ahead.

Related Read: How To Write a Craft Store Business Plan: 9 Steps

Strategic Vendor Negotiations in October

October is your secret weapon if you want to survive January.

During October, if you’re planning ahead, you can have some slightly awkward (but necessary) conversations with your landlord and some key craft store inventory suppliers.  

Start with your rent. Many landlords are willing to offer seasonal adjustments for established tenants, but only if you approach them before you’re in crisis mode. That way, you’re not asking for charity, you’re proposing a business solution that lets you pay more rent when sales are strong and eases up on the payments when things are slow.  

Do the same with your major suppliers. See if they’ll allow you to arrange flexible payment terms or delayed invoicing for January orders. 

The key to both of these things is preparation and existing goodwill. Only ask suppliers and landlords with whom you already have a strong relationship, and approach them before you need the help. They’re more willing to work with retailers proactively than they would be if you called in February asking for an extension. 

Smart Inventory Reduction 

You can save some cash by reducing your January inventory orders by about 60% from normal levels. But you don’t just want to reduce everything by 60% across the board: the trick is reducing those orders strategically. 

Focus your orders on fast-turning consumables like threads, needles, and basic crafting supplies rather than big-ticket project materials. January customers are often working on finishing existing projects or tackling small, quick crafts rather than starting major undertakings.

Not sure where else to cut? Your sales data can help. Review the data in your point of sale (POS) system to see what sold last January, then make your ordering decisions using that data as a basis.  

Revenue Replacement Strategies

In January, you’ll be bringing in less revenue from your normal sales categories. If you want your store to thrive in January, you need to get creative and replace some of the revenue you’re losing. 

Launch "New Year, New Hobby" Programming

When retail sales tank, it's time to pivot to services. 

January is slow for sales, but it’s usually a great time to launch class and workshop programming. People have time, resolutions to be creative, and gift cards burning holes in their pockets.

Market directly to resolution-minded customers with beginner-friendly workshops. "Learn to Knit in 2024" or "Quilting Basics for Beginners" classes are good places to start. Offer these classes at a discounted price, and consider offering series packages where customers can pay upfront for multiple sessions.

This strategy is a win/win, because you’ll get the revenue you need for your January slump and potentially win some new loyal customers at the same time. 

Early Valentine's and Spring Project Development

Other businesses may say early January is too soon to start capturing sales for Valentine’s Day and spring projects. But a big portion of crafters are planners! If you’re offering deals on these items when other stores aren’t, you have a good opportunity to capture those additional sales. 

Create project kits for Valentine's Day that customers can start in January. Market them as "make-ahead" projects that avoid the last-minute rush. 

Many crafters actually prefer working on projects well in advance, and you're giving them permission to start early. Be sure to leverage the time it takes to complete these projects in your messaging. Remind your customers that a Mother’s Day quilt needs to be started in February at the latest if you want it done by May. 

Related Read: Marketing a Craft Business: 6 Steps to More Customers

Strategic Cost Cutting and Expense Management

Boosting your revenue is only part of the equation for surviving January. You’ll also need to cut costs and expenses wherever you can to survive the post-holiday slump. 

Staffing Adjustments

Let’s be clear: Cutting costs doesn't have to mean cutting people. Start by reducing hours while keeping your core team intact to keep morale from dipping low — and to prevent you from losing the key players you’ll need when sales pick back up.

You’ll also want to cross-train your remaining staff so everyone can handle multiple responsibilities. Your sales associates should be able to teach a basic class if needed, and your class instructor should be comfortable working the register. This flexibility lets you operate with fewer people without dropping any of your offerings.

Related Read: Elevate Your Retail Business: Top Customer Service Tips for Retail Business Owners

Vendor Payment Prioritization

Not all vendor payments are created equal. You’ll want to prioritize your payment schedule based on some key considerations. This tip also works best when you’ve already approached some vendors in October to get clearance for payment flexibility, so keep that in mind. 

Your rent, utilities, and key suppliers get paid first. Everything else gets prioritized based on payment terms and relationship importance.

Create a payment schedule that aligns with your cash receipts. If you know gift card redemptions will bring in cash mid-month, schedule some vendor payments accordingly. Most suppliers understand retail seasonality and will work with you if you're upfront about your situation.

Inventory Management Best Practices

Inventory management is key year-round, but it’s extra important when your revenue is lower than usual. 

Holiday Clearance Strategy

First and foremost, you need a strategy for putting your holiday overstock on clearance. 

Your clearance deadline is December 28th. After that date, holiday merchandise becomes dead stock that just takes up space. 

Our recommendation is to be aggressive with your discounting as you approach these late-December dates. A 50% loss on Christmas fabric is better than having it sit in your stockroom until next December. 

You can also create "clearance bundles" that combine slow-moving holiday items with regular supplies to entice people to buy that stock and minimize your losses overall. 

Resisting Spring Merchandise Temptation

January is when suppliers push their beautiful new spring collections. We know we said earlier that you want to market spring and Valentine’s projects early… but that doesn’t mean placing a big order right off the bat. 

Wait until February to buy the bulk of your spring merchandise. By then, your cash flow will be more stable, and you'll have a better sense of what customers are actually looking for. 

For your January orders, focus purely on proven sellers. January is not the time to gamble on whether customers will embrace a new crafting technique or material. Stick with what you know moves consistently.

Use your POS system to identify the core inventory that sells every January or slow season, and invest the bulk of your focus on those items for the month. Then, when things stabilize in February, you can think about taking a risk on a new trend.

Surviving January: Craft Store Cash Flow Management With Strategic Planning

January doesn't have to be the month you dread. With the right planning and systems in place, you can turn a stressful period into part of a larger strategy that strengthens your business year-round.

The discipline you develop surviving January creates good habits related to finances and data-driven decision-making that benefits your store all year long. When you get into the habit of craft store cash flow management in January, you’ll find yourself naturally building cash cushions during busy periods and making more strategic inventory decisions based on data rather than gut feelings. 

Ready to take control of your craft store's cash flow? Rain POS provides the reporting, inventory management, and customer communication tools you need to thrive year-round. Build and price your ideal solution today and see how we can help you survive January in style.