Rule # 1: Always Maintain Enough Inventory

The reason that it is important to maintain enough inventory to cover your demands is because consumers cannot purchase what you do not have. They would have to, and probably will, look for it elsewhere. When maintaining proper inventory levels, one of the important things to take into account is lead time. This is the amount of time that it takes from when you order the merchandise, until you actually receive the merchandise. The said time frame varies from industry to industry and from vendor to vendor. You need to be order with enough time to guarantee that you will receive the merchandise when you need it. One of the best ways to be safe is to calculate a reorder point. Ordering extra merchandise will reduce the probability of experiencing understock, but ordering too much will hold you overstocked, which is not good either. For this reason, a margin needs to be developed based on a percentage of anticipated inventory needs while holding prior sales statistics in mind. Once you calculate this margin, you would set the Minimum Quantity of that particular product, and have a Point of Sale System remind you to reorder when the items reached that point.

Rule # 2: Avoid overstock

Having enough inventories to satisfy demand is one thing, but having too much inventory is a problem within itself. This is even more important when dealing with a seasonal item such as Christmas merchandise or “summer trends.” No one wants to purchase merchandise after a season is over, at least not for a reasonable price. Besides this fact, excess inventory is costing money. It is occupying space, which is prime real estate in the retail industry.

Rule # 3: Prioritize your Demands

The 80/20 rule states that about 20% of the products you sell will provide about 80% of your profits. These products consist of regularly selling items. Your customers return to purchase this merchandise repeatedly. Hence the significance of identifying which products these are and analyzing all aspects of these products to further aide in your knowledge of what needs to be stocked and what doesn't. You need to know that these products have to have a higher reorder point.

Rule # 4: Invest in Information and Information Gathering Techniques

The importance of Point of Sale Systems is sometimes greatly understated. Some retail owners believe that it is overkill, yet this simple tool can mean the difference between a productive store, and a store close to reaching a critical point. These systems can provide several key elements such as:

• Calculating when to reorder and what.
• Analyzing inventory levels.
• Analyzing sales (much harder and important than it might sound).
• Analyzing Customer trends.
• Controlling Employee consistency and honesty.
• Providing critical statistics for decision-making.

These systems are a true investment that allows owners to know what their business worth actually is. It allows you to experiment with merchandise and merchandise placement and can track the success or failure of those experiments. Another positive aspect of a Point of Sale System is their inherit control of inventory. This will provide you with an idea of what you need to by and when. Your Inventory Budget is the amount of available funds that you have to invest in merchandise. This is a figure that is calculated on a monthly basis. During the first year, these figures are probably calculates based on the amount of sales need to cover costs as well as the expected sales volume as per your business plan. After your first year, the POS system will be able to provide you with honest exact figures.

Retail Companies invest thousands of dollars in stocking their stores. This is probably, apart from location, the most important aspect of any retail establishment. Products are the heart and sole of the business. It is the link between the business and the customers. It astonishes me at the response I get from some retailers when I ask what Inventory Control or Point of Sale System they are using or if they are planning on obtaining one. The number one response: “Well, I need to invest everything in merchandise right now. I might get one later on.” Analyze this statement for a while. You're telling me that you are investing thousands of dollars in merchandise, but not in a way of controlling how the products are doing or how much you have left?

Why is this mentality flawed? To answer this question, ask yourself the following: Do you send your kids to school to learn and not see how their grades are? I am positive that most parents want to know if their kids are doing well, and if they are not, what are the areas where help is needed and how to improve those areas. The same goes with your inventory. It is vital to see how your products are doing. It is important to know which products are selling and which are lagging, why, and how to improve said products. You need to take control of your store and those elements that can make or break your business. Do you honestly believe that you can control thousands of products without a mechanism for storing the amount of information produced by the art of selling? The fact is that while it may be true to know what products are selling the quickest without any system in place, the truth is that as your business continues and as products continue rotating, you will be losing control as the days go by. You probably say to yourself: well, when that point comes, then I will implement some sort of Inventory Control System. Well, yes, that would certainly help, but realize that it will cost you a lot more to implement a system afterwards that doing it from the beginning. Begin estimating how much it would cost to close the store while you take inventory, how much retraining employees to use a new procedure for selling, as well as the headaches associated with implementing anything that it new to something that has already been rolling.

Hopefully, this article has been helpful in convincing you the important of an Inventory Control System for retail businesses. Think about it this way: If it is not important, then why do you see the number one retail giant, Wal-Mart, doing it?

Most small businesses underestimate the importance of their inventory or of inventory management software. They do not realize that many of the headaches are caused by a lack of control and knowledge of their inventory. Whether it is a lack of knowledge of the quantity of a certain product, businesses continue to use outdated systems that do not allow them to get the most out of their inventory. Inventory management systems, when used properly; allow a business to make established analysis of products and markets that help them make better business decisions. They keep a tight customer control to allow business owners to better serve their customers, and keep a detailed and accurate record of their customers purchase history as well as a way to properly reorder inventory. With a tight control of inventory, owners know when products are been stolen, when products are not rotating properly, or when products need to be reordered. By default, the business begins to develop an organization and by a control of inventory, profits begin to increase. Inventory Management Systems allow programmed owners to make decisions about promotions and specials and let owners know when a product is no longer being profitable.

We would like to take this opportunity to inform you of the steps necessary to make sure that your computer systems and data are taken care of in the event of a hurricane. Most companies ignore the importance of a hurricane preparedness plan for businesses and we want to make sure that you are not one of them. Because of the sensitivity, significance, and importance of your company's data, you must ensure that it is properly protected. In the event that a Hurricane Watch is posted, the following steps are recommended:

1. Take inventory (pictures as well as a list) of computer systems (POS Systems) as well as critical machines.
2. Be prepared for backing up critical information. Make sure that you have the proper media (Tapes, CDs, etc). Make sure that the backup units are working properly.
3. Designate the task of backing up to someone that has the proper knowledge of performing backups.
4. Look for a closet or storage location that is away from doors and windows that can temporarily house the essential computer systems (or as many as possible).
5. Be prepared to store important software such as operating system CDs, Word Processors, or other software that is essential to the company's operation. Include their respective licenses.

In the event that a Hurricane Warning is posted, the following steps are recommended:

1. Perform backups on all machines (at least three separate copies). For customers with Point of Sale Systems, your database is the most vital file. It is located in C:\Program Files\Inventek Point of Sale\datPOS.mdb.
2. Store one copy in a safe place (closet or location away from doors or windows).
3. Store a second copy in a location away from you business such as your home. A person of high confidence should take the last copy. These medias should be placed in a plastic zip lock bag and stored in a safe dry location. Store the essential computers and appropriate machinery in the designated closet or safe spot. The computers that do not fit are to be disconnected from their power source, and placed away from doors or windows, at a high location away from the floor. MAKE SURE NO ELECTICAL CIRCUITS FOR THE COMPUTERS ARE LEFT CONNECTED!
4. Make backup copies of all operating system CDs, Word Processors, or essential software as in step two and distribute them accordingly and store original and copies in a safe place (different locations).

In the event that a hurricane disaster takes place and all computer systems are damaged or lost, at least you can feel assured that sensitive data is available. Keep in mind that computer systems can always be replaced, but if no good backup is available, that data can never be restored. Therefore, the loss will be severe and recovery and downtime will be a long and painful experience. Having the data properly backed up will avoid unnecessary pain and aggravation and will allow for the lowest possible down time.

Please do not take hurricanes lightly. Protect yourself as well as your business accordingly. I hope that you remain safe and will pray for the best.

If you should need any assistance in following a Hurricane Preparedness Plan please feel free to contact us at your convenience at 1-866-742-5847

Through my years of working with the retail industry, I have learned a great deal through observation and experimentation. Mistakes made by my customers as well as their successes have provided me with an insight that I feel compelled to share. I have seen many retail establishments open and close and have observed those that have succeeded as well as those that have failed miserable. Through those experiences I have been able to come up with a list of typical mistakes made and can provide guidance as to how to avoid and overcome them.

Some of these mistakes might seem trivial and common in nature; however, they are seen again and again.

I saw a great store pull numbers in their peek season only to close a few months after there incredible sales. First, let me explain how they pulled numbers that were simply outstanding. The store opened up in the August season. They were well stocked and had a great opening. They keep in line with reorders and were rotating inventory adequately through their initial months. As the money began to come in, the owners continued reinvesting in their venture. Suddenly, they experienced the success of their Christmas season. Sales quadrupled! There are actually several lessons that can be learned from the mistake that this owner was about to make:

• Lesson 1: Never get overconfident with sales made in December. Expect that those sales will only be pulled in that month. If you can get other months to resemble December, then great. But do not expect that. Usually, it does not happen.
• Lesson 2: Take advantage of the good months to balance off bad months. This is especially true for the holiday season. After the holidays, sales go down for the next few months. Let the holidays balance out the slow months.

Once December passed, this business owner stopped reordering. This leads to the next lesson:

• Lesson 3: Never leave your store under stocked. Never ignore your Inventory Alert reports or Sales Analysis Reports. Your Point of Sale System is there for a reason. Use it wisely. You will be amazed at how many retail owners make this mistake. After investing so much energy, money, and time into getting customer to like the store and the products, you leave your customers with a sour taste in their mouths by leaving the store empty with old products that do not rotate and nothing new to look at. Once customers return twice to the store and see empty shelves, they will not come back a third time.

The business owner, after the holiday season, decided to invest the capital achieved into a separate venture. Translation: he invested elsewhere instead of restocking.

• Lesson 4: Do not lose your focus. This owner made several mistakes, but this one cost him his business. He allowed his store to empty out and did not restock because he lost his focus. He stopped working for the store and tried to do too many things at the same time. Do not misinterpret this. I do not mean that one should not diversify and invest in other ventures. If you have the proper funds to allocate and the proper time to invest and it will not derail your efforts from your current store, then by all means invest. However, a line needs to be drawn. If you are going to take an action that will force you to lose focus on your initial or main goal, then you seriously need to reaffirm your priorities.

That was it for this customer. A few months later he was forced to close the store. The worst part is that the other venture that initiated failed.

The next observation is on a more positive note. It is an example of how combining statistics, reports, and customer observation can help you make good decisions. This customer started a relatively small store in a small town. His sales were good and he was happy. However, like any good entrepreneur, he wanted to know how to increase his sales by making strategic changes in the placement of his merchandise. These are strategies used by the big guys such as Wal-Mart and Sears using data warehouses and statistical analysis. It's probably pretty safe to assume that you probably would not invest the kind of capital required for obtaining the equipment and resources need for that type of data, however our Point of Sale System can give you very powerful information that can probably provide the same type of results in a scale more directed to your store size. What this business owner did was reposition specific merchandise and then observe the results (whether positive or negative). He pulled a Worst 20 products reports and a Best 20 products report. Afterwards he pulled Sales History reports on all 40 products and observed sales trends for a month. He recorded the position of those products and started repositioning those that rotated quicker with those that lagged. He observed for a few weeks and reran the reports to look for changes. He was able to observe that products placed in a specific place (right side of the entrance) moved quicker regardless of what they were. He then decided that when products were lagging, he would place then either on that wall or on a bin next to the wall on special.

• Lesson 5: Do not be afraid to experiment with your store. History is proof some of the most successful achievements were based on accidental findings.

I hope you have learned something from these two business owners. The next newsletter will be focused on tips on how to improve sales.