As summer approaches, you are either the type of business that thrives or pulls back for the slowdown of summer. Summer is a very hit or miss time for businesses depending on what industry you are in, and where you are located.
As a business owner, having the right amount of inventory can help to make or break your company. The summer months may be a time where business slows due to vacations and summer travel. However, if your business is in a tourist area, you may thrive on the extra money many spend while they are vacationing.
Whether you own a retail store or are a restaurant owner, inventory control is a vital part of your survival. Consistently having too much or too little inventory can eat into your profits. Without a solid understanding of your financials, it is difficult to make buying adjustments. Knowing your clientele can help to determine the inventory that you need to have on hand for summer planning.
Do you know when your peak season is and when your slow times are? Are you reviewing and adjusting inventory on hand? How do you find that happy balance? Taking the time to do an analysis will help you to identify your peaks and valleys so you know how to plan. That’s where a bookkeeping service that takes ownership of your account comes into play. They can actively help you to determine buying cycles and when to make adjustments.
After you have identified your selling season, determining the proper inventory can help to reduce your overhead and upfront costs. Rotating new inventory throughout the year will help your business stay on top. For restaurants, it could be new menus for summer. For retail stores it may be bringing in summer red white and blue items for Memorial Day and Fourth of July. Customers enjoy variety and business owners that deliver are the winners. Don’t forget the use of social media to promote these efforts.
Improperly managing inventory requires you to provide the upfront cash for the product. The longer it sits on the shelves the longer it takes you to recoup the money that you spent. Customers are fickle and markets change. What this can mean for you, is that the product may not be as desired as it once was resulting in having to discount it to move it. This not only reduces the amount of revenue you are able to generate off of the product, but also increases the likelihood that you may struggle to sell the product all together. If you don’t have a firm grasp on buying trends, you may very well be left holding the bag as fall runs around and there’s a vast amount of summer inventory left.
Restaurant owners know that food waste can be a huge cut into your profits. If you over order or order the wrong foods, you can wind up throwing away much of what you purchased to sell. On the other hand if you run out of food, you will find yourself struggling to keep loyal customers coming in the door.
Whether you are a retail store or restaurant owner, knowing when to buy to coincide with a business cycle can help you be more profitable. Paxton Bookkeeping and Tax Services provides monthly reporting to our clients so they know how their buying cycles occur. Remember, customers want to see something new. By staying on top of changing inventory, allows you to deliver. The proper amount of merchandise can make all the difference when it comes to YOUR profit and loss.
Want to learn more, give our office a call at 724-359-5022.