David Brown: Cash in That Extra Inventory

Being proactive is key in the post-holiday period.

BY DAVID BROWN

Published in the January 2014 issue.

By now, the excitement of the festive season is most likely gone and the reality of the new year has arrived. With new hope and opportunity also comes a little bit of a hangover … and a bank account full of cash (hopefully!) but a mountain of vendors to be paid!

But what if there is no cash in the bank? Chances are you had a better than average month trading (even the worst December still beats every other month) but there may be little to show for it. Where did all the money go? I’d be willing to bet the cash is in your inventory. Most stores end up with a higher level of inventory in January than they had in December — understandable given the time of year and the need to be ready for the opportunities, but frustrating when it comes to enjoying the benefits of your hard work.

So how can this be cashed in? There are a number of options:

The new-year sale. A tried and true formula, however it can lead to predictability and to people waiting for the new-year sale to buy their festive gifts if over used.

Melt down. (No, not you, we mean the inventory!) This can be an effective way to cash in the value of the raw materials, but not so wise if you’re losing too much off the wholesale cost.

Exchange it. If you have a strong relationship with your vendor (and are committed to doing good business with them on an ongoing basis) then this may be an option but it needs to be a win: win for both parties.

Swap with another store. Do you have other jewelers you have good relationships with? Could you exchange product with them? I know three jewelers who did this several years ago and discovered that they each had over $10,000 of slow moving product that was, in fact, a fast seller for one of the other two! Even sending old product over on memo to a fellow retailer can help.

Better still, put a note around your buying group letting others know what you have and that they can order it directly from you. If the product has been featured in a group promotion and you have too many left over there could be fellow group members looking to replace the ones they have sold. Get the word around before they place their reorders so you can move that inventory while it is still current.

Moving old product on is just a matter of being proactive. If you want to enjoy the fruits of your festive efforts put the time into the post-December cashup when others are likely to be restocking.