Subject: Money sitting on the shelf…
If I heard this phrase once, I heard it a million times from my accountant husband. Inventory is money sitting on the shelf.
Now, while some companies do not allow their consultants to order and carry inventory, mine did. For some of us, because we work many booths and conferences in the springtime, inventory can be a necessary evil, so-to-speak. People come to these events and expect to be able to purchase items on the spot.
However, if you carry (or plan on carrying) inventory - here are some things to keep in mind.
Don't purchase inventory from your `paycheck'. A few days ago, we talked about the 60-20-20 rule in terms of budgeting. (60% is your pay, 20% to reinvest and 20% discretionary). Inventory purchase is an example of discretionary spending.
DO remember, that if you purchase inventory, while it may make your personal sales look amazing for the month - if you don't sell the inventory, it just takes a bite out of what you are selling next month (assuming you are filling orders with inventory that following month)
Don't get into the habit of purchasing inventory to `make numbers'. (Been there, done that) - nothing takes a bigger chunk out of your ability to pay your bills than when you've reinvested your profits back into inventory. Product does NOT translate into milk and eggs at the grocery store.
A few things regarding Noah's Ark here. I like to encourage crew members to look ahead in their month - maybe out 6 weeks or so and then order ONCE A MONTH for the upcoming 6 weeks so that you can purchase at that 45% discount price point. Then, 4 weeks later (the next month), take a look at where you are and look 6 weeks from that date again, refill what you need for the next 2 weeks as well as order ahead for the next 4, etc. That way you're ordering monthly (very important if you have a team under you) and you're not carrying inventory that you won't be using. It's also a great way to help you determine your best selling animals, etc.
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