A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.
By Doran Fluckiger, WSBDC Southwest Wyoming regional director
“How do I maximize inventory profits for my small retail business?” Marie, Kemmerer
Maximizing inventory profits can be accomplished by implementing a computerized system to manage, control and balance an owner’s inventory.
Many small businesses have a computerized system but fail to use its full functionality. To determine if you are using a computerized system properly, answer the following questions:
Can you create a report of your hottest selling items by day, month and year? Can you determine what each item costs you versus what you sold the item for? Can you determine what items sell better in March, versus August, using your system?
The advantages of answering "yes" to each of these questions are the ability to order the best-selling items and the quantities needed during the season the item sells the best; to decrease shipping costs; and to sell only the most profitable items.
Sales history reports that accurately reflect past sales take the guessing out of what to order and how often to order the item. Retail stores must order merchandise to keep shelves fully stocked, and make substantial orders to reduce shipping, ordering and handling costs. Ordering inventory for the months of January-March becomes much easier if you know what items sold last January-March, and what merchandise created the best return for you. Accurate sales history reports are essential if you wish to maximize retail profits.
The most effective way to track sales history of inventory is to place each item you plan to sell into a computerized system. This must be done individually. Using a bar code system allows the owner to quickly sort and find items within the system when selling to customers. Be sure that each item has an accurate sales price and correct cost. This process can be time consuming in the beginning, but saves substantial amounts of time and money when reordering items.
Using a computerized system to generate reports that accurately track sales history of inventory will help maximize profits for a small business.
A blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.
