Sponsored by Sage
By Rieva Lesonsky
Every holiday, you plan for what inventory your business will need, and yet somehow, you still don’t get it right. Either you’ve got way too much leftover products, or you didn’t order enough and ran out during the holiday shopping season. Either way, your business suffers as a result.
If you have too much inventory, it means you overextended yourself financially, using resources that could have been leveraged elsewhere to buy stock that went unsold. Now you’ll have to sell it at a loss. If you didn’t order enough inventory, you either miss out on sales you could have made had you been adequately stocked, or take a hit by paying rush charges to restock your inventory in time.
When it comes to inventory, the “holiday hangover” is a common problem among small business owners. However, with a little planning and smarter inventory management, you can avoid the same problems next year. Here’s how.
- Start with software. First and foremost, if you’re not using software to track your inventory, begin doing so immediately. There are many accounting solutions that include inventory management. If you’re already using inventory management software, then make sure you’re making the most of the features it offers to closely track your resources.
- Track trends. Most inventory management software will allow you to track trends over time—such as which are your best-selling items, how many of them you sell and how often. Use this information to your advantage and order inventory accordingly. When reviewing trends, make sure to take into account any temporary spikes, such as sales generated by discounts that might spur unusual inventory movement.
- Move merchandise. Are there certain products that don’t sell as well as others? Consider offering discounts on these slow sellers before the holiday season gets into full swing. This ensures steady movement and enables you to stock your business with in-demand merchandise.
- Track customer behavior. One inventory trend you might discover is that certain customers tend to buy a certain item at specific times of the year. Track this type of seasonal behavior and capitalize on it.
- Reward loyal customers. By monitoring inventory, you’ll discover which customers are the most loyal. Whether you’re a retailer or distributor, you can use incentives to reward those top customers and encourage them to buy more from you, or to buy from you more often.
- Plan ahead. Forecast what your inventory needs will be both before and after the holidays. Depending on your business, keep in mind that ordering inventory early so it arrives before the holidays may help you both before and after Christmas. If you think demand for a particular item will continue to be strong in January, ordering early can ensure you have plenty in stock.
With the right inventory management tools and a good eye on data you should already have on hand, you can avoid holiday headaches next year — and for years to come.
(And if you still have leftovers from this holiday season, there’s help: Boxfox is a site that buys overage from merchants and offers it for sale, so you can recoup at least some of your investment.)