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Last Updated on January 20, 2024 by Work In My Pajamas
According to a recent survey, it was discovered that roughly 80% plus of small and startup businesses close their doors within the first year. This is a shocking inventory. Consequently, majorities of small businesses are increasingly looking for means through which they can increase their demand so as to avoid going out of business.
Regrettably, only a handful of small businesses have the capacity to handle unexpected increase in demand. Without proper planning, increased demand can result in problems like scarce inventory amounts, which in turn affects your capacity to provide your clients with goods/services on time.
Working directly with suppliers in anticipation of increased demand is the key to ensuring that issues to do with scarce inventory do not arise. To find out more, keep reading this article to the very end.
How to Manage Inventory
Discussed below are tips on how to manage inventory:
Obtain a Backup
The first thing you need to do is to make certain that you do not rely only on a single supplier. Then again, do not overdo it. A good rule of the thumb is to have at least two suppliers. Having more than two suppliers makes it hard to manage a good relationship. On the other hand, having more than 2 suppliers provides you with more room for bargain. If you think that the cost of acquiring goods from one supplier is high, then you can opt for another supplier.
Get a Partner
They key to establishing a good relationship with your supplier is by making certain that you are not only their favorite client, but an important one. You core objective is to urge your suppliers to view you as their key partner. This way, even if you do not have enough cash to secure the goods, they can open for you a line of credit. This in turn eliminates the need for rushing to a bank in order to secure financing, thereby saving you from paying thousands of dollars in interest when you could have just secured goods from your supplier on credit and pay for them as soon as they have been delivered to your customers.
The first step to establishing good customer-client relationship with your suppliers is developing excellent interpersonal skills. If there is a slight delay in the delivery of goods, find a polite tone of talking to the suppliers rather than screaming at the top of your lungs. Since time immemorial, communication has been found to be the secret to building a good relationship.
Keep Tabs of Supplier’s Data
As is the case with budgeting for your finances, it is also important to keep tabs on your supplier’s data. Get to know what your supplier has in stock at all times. This way, you can know how to plan so that you do not disappoint your customers
In addition to the above points, you also need to budget for unusual circumstances. According to market analysts, small businesses can optimize their budget supervision by creating three different types of budgets. These are:
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A budget with an assertive forecast in case of increased demands.
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A budget that utilizes conservative assumption.
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A budget that takes care of worse-case scenarios.
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