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CONTROLLING YOUR INVENTORY

© Barbara Massie

How is your new year progressing? At the beginning of a new year, most of us reflect on the past year, then resolve to do better in the future. A required chore at the end of the year is taking and finalizing inventory. This particular "required chore" isn't difficult when you have a structured inventory system and detailed records.

Many creative people can care less about tracking inventory, but it is the basis of a craft business. Control of inventory helps sort out items that are not selling from the past. It helps you judge which purchases to make in the present to create merchandise to sell in the future.

HERE ARE SOME DEFINITIONS TO DIGEST:

INVENTORY CONTROL - A system designed to keep track of all materials. How much, how many in use, how many in stock, where in stock, and possibly rated as to age and condition.

BOOK INVENTORY - The amount of stock shown to be on hand by a perpetual inventory system, wherein sales, markdown, and discounts are deducted from total purchases to date.

PERPETUAL INVENTORY - Method of keeping a constant calculated count "today" and "to date" of purchases, supplies used, items made, and sales, etc.

PHYSICAL INVENTORY - Determining by actual inspection and count the volume of supplies and merchandise on hand in booth, boxes, and storage.

Not much is written about homebased businesses and inventory, so we must go to information intended for businesses larger than ours. Go to the report on physical inventory at: http://www.uvm.edu/~ofabweb/Audit1.html. The guide is very detailed and full of advice.

What is inventory? For the manufacturer (hand-crafted finished product manufacturer) it is the materials used in the process and in the completed product. For the retailer it is the merchandise on hand for sale.

Do you purchase supplies, then glue, nail or sew them into a finished item? Do you take the finished items to sell at a craft mall or craft show? In all likelihood you do both, so you are both a manufacturer and a retailer.

Inventory is money. It is money spent to buy supplies which are converted back into money when completed items are sold. Inventory is money in items stored out of sight in boxes. Careful inventory control increases sales for profit by minimizing slow items that eventually are marked down to sell or scrapped because they are out of date, dirty or broken. The longer inventory takes to flow through the business, the longer money is tied up and unavailable for other purposes.

The copyright of the article CONTROLLING YOUR INVENTORY in Crafts is owned by Barbara Massie. Permission to republish CONTROLLING YOUR INVENTORY in print or online must be granted by the author in writing.