While small business confidence in the U.S. may have soared during July, the nation’s economic growth remains hampered by a paucity of available credit. Although this may be understandable given the irresponsible lending that preceded the Great Recession, it is important that independent ventures are able to expand in the years to come.
Even without a surfeit of credit, however, businesses must learn to succeed by maximizing their existing resources. This is particularly important for retail business owners, for example, who can significantly boost their levels of profitability by mastering the difficult art of stock management.
Learning the Art of Stock Management: How to Maximize Profit Margins
With this in mind, what should retailers bear in mind when they are looking to manage their stock levels effectively? Consider the following: –
- Remember that Profit is Impacted by Unsold Stock: When independent retailers calculate their profit, it is all too easy for them to become confused by turnover and sales volumes. While your firm may have sold an estimated $10,000 worth of items during a single financial quarter, however, this will be offset considerably by any unsold stock that you continue to hold in storage. Firms that hold more in stock value than they generate in monthly sales may be considered to be loss making, as any items that remain unsold represent invested capital. With this in mind, it is wise to measure your profits in line with any existing stock holding.
- Identify Popular Lines and Products: While minimizing your stock holding will help to save money and maximize profitability, you must ensure that you have a clear understanding of your most popular lines and products. This way, you will be able to invest in a larger volume of these goods, safe in the knowledge that they will sell quickly and generate a viable return. Efficient stock management relies on your ability to minimize unnecessary investment and identify the most popular retail items, which represents a delicate and difficult to achieve balance. You must also be wary of seasonal products, as these have a limited shelf life and must be sold within a tight time frame.
- In vest in Self Storage Options: As a small or independent retailer, you may only have a single store front or outlet. This means that your stock holding may be relatively small in the first instance, and this in turn allows you to consider more flexible and cost-effective storage solutions. Self storage units are particularly useful, as they are cheap to rent and provide you with a set amount of space that helps you to regulate your stock management. If you have more than one outlet then you may also consider mobile storage solutions, as this enables you to create a fluid stock holding that can serve several independent outlets.
Author Bio: This article was contributed by Lauren on behalf of Completely Retail. To access a viable location for your burgeoning retail business, consider visiting the website today.