Equipment, Supplies, and Suppliers: These are usually treated as capital or expenses. If any of them is not generating more profit than it is costing, then ask yourself, “Why should I buy or use them?”
Policies and Procedures: These aren’t often viewed as inventories. In certain cases, they may hinder sales rather than promote it. But because all profits are generated by sales, policies and procedures should be considered as inventories, and they should be created to generate profit.
Salary and Staff: These could easily be viewed as expenses. But they should be considered as inventory. Like your products, your staff is an asset and what they do should generate profit. Why? That’s because twice a month, your business gets a shipment of inventory (in the form of staff’s activities) that you have to pay for. Having a salary that is too low could translate to dissatisfied employees, or you don’t have the best people for the job. A salary that is too high, on the other hand, means that the cost of their activities prices them out of the market.
Customers: Customers are the most valuable inventory of a business. It’s not what you’re selling them is important but, rather, it’s what they’re not buying from your business. A firm can grow in two ways: to sell more to current customers and to sell more to new ones. Which of them, do you think, is more cost-effective?
Each of these inventories must be bought and marketed correctly. When each of them generates profit, the management can then do what they have to do.
A business owner should take note of certain information that can be vital to the firm. They should be looking for the following information:
What marketing strategy did you do that did not translate into sales?
Bear in mind that not every marketing effort concludes with a sale. Ask yourself what went wrong and what you could have overlooked. Then determine what you could have done to make the sale.
What products were returned and what does your customer have to say about it?
What’s vital to any business is to understand the situation and create a solution. Keep in mind that every product returned and every complaint received is an opportunity for you to improve your business. Not doing anything about it is a sign of indifference to a potentially loyal customer.
What information, product, or service did a customer ask that you don’t offer?
Chances are people will come to you asking for something they believe that you can supply. If many people ask for it, then you may have a market. If you can, adjust your service to meet the new demand.
What do you and your competitors have in common?
What do you do better or differently? What do they do better or differently? A business owner should never assume that their customers know that you offer almost the same things as your competitors.
It is your job as the business owner to create a strategy where everyone can bring in results without the fear of job security or embarrassment. When business slows down, you have the opportunity to look at your business in a different way. The answers to the questions above and the aforementioned inventory should help prepare you for the time when your business downswings.
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