For those businesses that operate in an industry that is seasonal by nature, inventory management becomes even more complex. Navigating seasonal fluctuations requires owners to have sufficient inventory control skills so that they remain profitable during the slow season and can survive through the off season.
Planning is crucial and even if you only open for a set number of months during the year, it is still necessary in a seasonal business to have a 12-month plan. Before developing a detailed sales and inventory management plan, ask yourself the following questions:
What can you afford?
You need to determine how your business will afford to achieve its strategic goals and objectives. How will you pay for ongoing expenses such as rent, machinery, taxes and any other applicable costs over the course of a year? To keep cash flow steady season after season, you should develop a budget or financial plan based on sales successes and failures of seasons past.
What are your sales projections?
If you have been operating your seasonal business for several years, then you should have a general idea of demand and sales forecasts. Build your sales plan based on what your level of sales are most likely to be.
Start by reviewing the previous year’s sales history and adjust for unusual events, such as one-off promotions, supply disruptions and stock outs. Calculate the appropriate increase or decrease based on your current sales trends and your likely sales potential for the upcoming season.
Most sales plans can be broken down by category and month. For larger categories it may be prudent to break down the sales plan, by sub-categories, styles or vendors.
What are your best sellers?
Take note of top selling items, these can be anything from fan favourites, seasonal essentials or simply your most profitable product. When you have identified your seasonal anchor products, it is time to start work on advertising and promotional activities.
For your predicted best-sellers, ensure you have sufficient inventory stock on hand but take care not to overstock to the point of being left with unwanted goods. Remember, with today’s technology, the reordering process can be done in a few clicks of the mouse, and in your warehouse in a matter of days!
Managing and maintaining consistent inventory levels can be one of the more stressful facets of running a seasonal business. It’s difficult to predict exact inventory needs and to manage the challenge of uncertain demand.
Always have a plan when it comes to ordering inventory stock for your store. It’s never too early to start taking stock of your seasonal inventory. Re-order early and often during your busiest times; empty shelves may signify high turnover, but they might also represent a missed sales opportunity and possibly dissatisfied customers.
Know the lead-times of all of you suppliers and make sure you have acceptable shipping and delivery arrangements in place ready for your peak season.
And finally, stay up to date with industry trends and consumer spending projections while tracking your own sales data from previous years. It is one the best ways for you to predict future inventory management needs.