With the Holiday Season upon us, you’re probably bracing yourself for the surge of buyers and customers that will come charging through your store. If you have experience in retail, there are probably some tried and tested strategies that you rely on to keep your head above water when the flood of commerce comes your way.
A busy Holiday season is probably one of the best things that can happen to a retailer. It implies more sales, a steep increase in customers and revenue and a chance to show off your best face for customer service. But it’s also true that with all those incredible opportunities for growth, comes a hustle and bustle that you must be prepared for in order to get the most out it.
One of the main challenges a retailer faces during this time is having adequate inventory to be able to respond to the demand. If not properly stocked up, you could end up with a surplus of products that you can’t sell, or not enough to supply the demand, leading to a loss of customers that would otherwise have left their money at your store. It’s a tricky call because inventory is purchased with cash from your business, meaning that the cash is tied up while you sell what you have in stock.
With proper financing for inventory, you can easily stock up and still have a cash flow that gives your business room for growth. Here at Cheddar Express we offer a variety of inventory funding solutions so you can choose what best fits your business and give it the best chance for growth.
So what are the actual advantages of taking out a small business loan to boost your inventory?
Knowing How Much Is Enough
If you don’t buy enough inventory, you will quickly lose your client’s interest in your store and they will take their business somewhere else. But buying too much can also become a problem. A surplus of products will sit in your warehouse and use up valuable real estate. Switching from a manual inventory management system to a digital software is the first big step towards knowing what you have and calculating what you need. 46% of small or medium businesses use manual methods or don’t track inventory at all, resulting in chaos when busy seasons like Black Friday come along.
For hectic Holiday seasons it’s more advisable to use the Material Requirement Planning method, which schedules purchase of product according to the sales forecast. Using the “Just In Time” method can be risky, as it only orders what is needed at the time instead of stocking up. During a busy sales season you can quickly run out of stock and clients will have to wait for a new delivery. A key value to track is the “days inventory outstanding”, meaning the number of days that your company can continue to operate normally with its current inventory. This value greatly varies depending on the sector. Based on data from 2013, packaged goods store keep on average 33 days of inventory, department stores keep 58 days and restaurants keep 7 days.
Keep in mind that due to increased online sales, more Americans will buy on Cyber Monday than on the actual day of Black Friday. Make sure to keep this in mind when making projections for inventory purchase. Many people want to avoid the wild and slightly dangerous shopping sprees of Black Friday, so prefer to take their business online. When planning your inventory distribution, you will have to decide whether the online purchases will come directly off the store shelf or will be shipped from you warehouse. Your website, staff and inventory must be ready to properly attend business from both fronts.
Discounts, Discounts, Discounts.
Using financial aid for your inventory can actually help you save money. Normally retailers don’t like to buy inventory in advance because it means they have their business’ cash just sitting there in storage and the have to wait a while to get the money flowing again. This isn’t the case when you stock up using a small business loan or a business cash advance.
Having cash to use freely is a huge advantage. It means you can buy during the off seasons when prices are lower and take advantage of sales and discounts that vendors usually offer if you pay upfront. They’re also more than happy to make big discounts if you buy in large volumes, which you can do if you’re backed up by a financial lender. Knowing that you don’t have to dip into your business’ cash and risk its stability allows you to invest more freely in your inventory.
Be One Step Ahead
The huge sales made during holiday season are the cash that keeps the business going when the sales are low. This down-time is great for stocking up on inventory, but the cash is needed to keep the wheels turning and usually can’t be spared for investing in inventory. An advantage of a small business loan is that you have free cash to properly stock up, not only on essentials, but most importantly, on what is really going to sell next season.
It’s your chance to be one step ahead with all the hot new stuff coming in next season, making sure to properly stock up before the big retailers buy it all. Having large amounts of something you know is going to fly off the shelf, ensures a constant stream of happy customers. Even better if, thanks to a small loan, you can have that product before anyone else. It means that holiday sales can start a little earlier for you and buyers will be confident that your store offers what they want, when they want it. Every little extra sale helps towards making your Black Friday sales a huge success.
Organization Is Key
Buying your inventory well in advance of Black Friday and the Holiday Season means that you can be 100% ready for the eager buyers coming your way. By planning in advance, you’ll have enough time to decorate your window with your incoming products and train your staff how to deal with the big waves of people that you expect to visit your store. Being organized in every detail will avoid angry customers, frustrated staff and missing products. Remember that Black Friday is a shoplifter's paradise, so be prepared. Make your store looks attractive, make the shopping process logical and pleasant, think of ways to make your customers feel comfortable and show off all the incredible stuff you have in your inventory with creativity and style.
People don’t like to shop in a lackluster store. They will know if you put effort into the aesthetics of your store and will feel more inclined to come in and look around. An organized store adds value to the shopping experience and to your products themselves.
Having your inventory in order also means you can plan your discounts and sales on a spreadsheet and make a sales projection that actually comes close to the real thing. If you’re all stocked up well in advance, you have plenty of time to sit down and make a list of what you have, how much you have of each item and how much you can afford to discount while still making a profit. You will avoid mispricing and inventory loss, and still have time to order more product if you feel you won’t have enough for the high demands of Black Friday.
Black Friday is an incredible opportunity for retailers to start off the end of year season on a high note. It’s your chance to make your store and your brand shine through outstanding customer service and great quality products and amazing organization skills.