The King of Cashflow: Want more cash? Don't keep too much stock

There are tons of reasons small businesses stock up on goods. What if you get a rush of customers and don’t have anything to sell? What if you could get a better deal by spending more at once? But not enough businesses ask the question: Do I have enough cash to cover an emergency? That’s what I want to see every company thinking about, and my helpful hints give you a huge head start.

Know what your customers buy

Projections are vital. You need to know how much people are going to buy, or you’ll have no idea how much cash to part with for new stock. Keeping a database of past sales will help you do this. With good offline bookkeeping and digital customer relationship management software such as Goldmine, you’ll be able to predict when you’ll need more stock.

Of course, your predications will be wrong at times, but it’s all about improving your eye for what sells. You’ll always have a buffer to make sure you have enough in stock, but how much is a safe buffer and how much is a waste of your cash? Well, that all depends on timing...

Stay light on what arrives quickly

If your business deals with more than one item, you need to know what you can get your hands on quickly and what will take longer. You can justify buying a few extra of something that will take weeks to get to you, but if something can be ready to sell within days, save your cash rather than buying huge reserves.

Make strong relationships

Building strong partnerships with your suppliers will do more than get you a lower price on your stock. If you show you’re a long term client, you might be able to reduce the time it takes to get hold of goods. That means a quicker turn around, which means less need for a buffer, which means a stronger cash flow for your business.

Don’t be fooled

Your suppliers might want you to spend more or take advantage of bargain bulk buying deals. Make sure you don’t always listen to them. You have your projections, so stick to them. If you splurge and let your business’ cash get tied up in bargain stock, you’ll struggle to meet other payments.

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