Inventory Management - Myth Or Magic?
In the recreational product industry, unit inventory is your lifeline to success or failure in business. Ken Blanchard and Don Hutson write in The One Minute Entrepreneur that "Many entrepreneurs go out of business because they don't know how to manage their money – they don't realize that their success depends on cash, cash, cash".
While this is very true and sound advice you could write that in the recreational product business, they don't realize that their success depends on inventory, inventory, inventory. Unit inventory is your biggest investment and is subject to many outside forces that need to be analyzed and controlled on a daily basis. Some of those forces are:
- Global economics
- Regional conditions
- Interest Rates
- Finance Company policies
- Seasonality
- Weather conditions
- Product introductions
- Insurance
- Competition
It seems quite daunting and frankly it is! As experienced entrepreneurs, you are the experts in knowing your product. You know every nut and bolt in the new product line, you know what your customers want and what will sell, you are pretty good at guessing what the seasonality effects will bring to your market place, and you make your purchase judgements accordingly.
There is no myth about the need to carefully manage inventory to be profitable in business, and there is certainly no magical formula to balance inventory for success. It takes consistent analysis, adjustments to margins, meticulous records, attention to aging product and timely marketing to address overages. I don't need to tell you the effects of excessive inventory on your business, but if you have concerns contact me for a complimentary tele-consult.
