The anguish of the stock

Very often, when you ask a manager of a hairdressing salon or a beauty center, the latter will tell you that one of his/her issue is to have the smallest stock possible. This is a legitimate concern because a stock, important or no, represent a part of the treasury.

But if having a stock is immobilizing the treasury, why not make the stock disappear ? Sweet dream because the stock ZERO doesn't exist ! Furthermore, the impact of the stock in the accounts of the beauty companies is far more limited than for a retail shop for example. You must ask yourself about the rules to respect to optimize the level of the stock. Good news, these rules are simple and they are common sense rules !

CLet's take the stock problem from the different angle; when the accountant says that a business has too much stock, it's always according to the turnover and the profit margin. But did I buy too much or didn't I sell enough goods ? What you must first identify:

• If they are everyday products, essential and standard references, then you may have bitten off more than you can chew : you accumulated many orders of the same references.
• If they are novelties and/or other products of the provider which are still there at the end of the year, this means you didn't tale care enough of the sale of these products.

A good management of a stock is not achieved by accident but remains on a bunch of common sense rules and a bit of vigilance:

• Having a good tool to follow the history of the purchases, reference by reference. If you are informatized, use the module of your program dedicated to the stock. If not, create a stock ledger which will contain all the references of your stock at the beginning of the financial year and the number of products consumed by reference every month  That way you will be able to make orders on the current references which will be calibrated according to the real needs.
• Setting up a regular stocktaking and respect it: every month or every terms, it's up to you. These intermediary inventories will warn you about references which are too many so you can react before it's too late.
• "Intelligent" referencing. When a provider proposed sales event or a novelty, the question is not to know if you have stock or no, the question is to know in what it will be useful for you and if you will improve your turnover thanks to that referencing. For example, I will not have additional revenues if I reference a novelty while removing the referencing of another range which works well just to reduce my stock: In the best case scenario, I will still sell as much as before but more ! However, if that novelty works in my business, it must be of the same importance as the other ranges which work already very well.
• Don't be your own enemy !Sometimes negligence leads us to create our own problems. Buying products means, selling them. You will need to present the animations or novelties to your team so that they can propose them to the clients and to follow the sales during the first month of the launch  This is an absolute rule if you want to succeed with a novelty, make additional revenues and make sure you don't find these novelties in your inventory at the end of the financial year.

As a conclusion, an efficient management of the stock doesn't consist in tightening the belts and ordering as little as possible but consist in selling what you order. Optimizing your stock means improving your treasury. Improving your treasury means that you must able to reference the novelties and the animations of the providers to add a strong dynamic to your business, to seduce the clients with new propositions and to create a additional revenues.

Not having enough products is even worse than having too many.
BUT BUYING MEANS SELLING !

Good business !

FOR A PERSONALIZED BUSINNESS SUPPORT:
EDEN ROC CONSEIL
Cyrille.hassam@sfr.fr