Making sure that you have enough inventory is critical, but juggling seasonal inventory can be especially stressful for small businesses. Ensuring customers won’t have to deal with backorders and you won’t have to pay for additional resources at the last minute takes proper planning. Since inventory is likely one of the largest assets on your business’s balance sheet, you need sufficient cash flow, working capital, and access to tools to help prevent overflow or shortages.
Here are tips to help you juggle your seasonal inventory:
On-Demand Storage: Consider renting space for any overflow as you need it rather than paying for extra warehouse space for the year. By having on-demand storage, you’ll save money by not renting space that stays empty during the off-season.
Inventory Management System: Using a software program to manage your inventory will help prevent human errors and also guarantee that you have what you need. These systems help to track online and in-store inventory in one place, and reconcile inventory across channels after you make a sale. Management programs can also alert you when you’re inventory of certain items is low and ensure that you don’t accidentally send multiple orders for the same item.
Plan Sales: Start by reviewing your prior year’s sales history to help forecast future sales. Plan for what you’re likely to sell the most of rather than what you might sell and make adjustments for weather, special promotions and out of stock items. As you figure out your needs, build your inventory around these calculations and be sure to have safety stock for an unexpected sales spike or late delivery. Keep your sales plan up to date and make necessary adjustments if you are coming up short or exceeding your goals.
Working Capital: Once you have determined the amount of inventory you will need, you should make sure to have enough working capital for requisite purchases. Determine which cash flow tools will help meet your needs. For shorter-term requirements, a small business line of credit may provide enough cash flow to bridge any gaps so you don’t miss an opportunity. If you’re making a larger purchase of inventory that may take time to sell, then a term loan could provide the appropriate financing. Either way, be sure your future cash flow is sufficient to pay down the outstanding balances.
Lakeland Bank offers a full range of business banking services including online services, business checking, savings and money market accounts, business loans, and cash management solutions. Our Customer Service Team can be reached at 866-224-1379.