Ensuring your shelves are stocked is important for any business, but it's equally crucial to keep your bank account healthy. If you provide services instead of physical products, imagine your work in progress as virtual stock – it needs to be managed efficiently to avoid financial strain.
Calculating your 'stock turn' is like figuring out how quickly you're turning your inventory or work in progress into cash. It's calculated by dividing your cost of sales by your average inventory or work in process. Don't worry if this sounds complicated; we're here to guide you through it.
Remember, every industry has its own way of doing things, so comparing your stock turn to others might not give you the full picture. What matters most is making your own business more efficient at turning stock into cash.
Here are some questions to get you started:
Stocking Strategy: Do you have a plan for how much inventory you should keep on hand, when to reorder, and how much to keep for emergencies?
Inventory Management Software: What tools do you use to keep track of how much stock you have?
Stock Policies: Are your rules clear about what to do with items that aren't selling quickly?
Shrinkage Costs: Do you know how much money you're losing to theft or damage?
Ordering System: Is there a clear process for deciding when to order more stock?
These steps are just the beginning. If you think your stock levels are hurting your cash flow, let us know. In our Cashflow & Profit Improvement Meeting, we'll go over the numbers together and come up with a simple plan to get your business's cash flowing smoothly. Let's turn your stock into cash, faster and smarter.
