Adding Inventory…A Good Thing?
For as long as I can remember, I have been working to reduce inventory. My experiences have always been with companies that employee a few hundred people or more and have revenue of at least $100 million a year.
Now I am working with a company of two people and revenue of under $10,000. It is the very small company that my wife has started out of our home. Last year was year 1 and it went pretty well. Well enough that this year we decided to take a few more calculated risks in order to grow the business and reach more customers in the area.
Because my wife is the marketer, salesperson, developer, manufacturer and everything else ‘er things have to be run a little differently. We have kept the manufacturing batches rather small so far. One batch of 8 bars of soap per run. With more risks we have to add inventory.
One risk we have taken is adding our product to local store. We own the product until it is sold at the store. This almost doubled our inventory since we have to have inventory ready for internet orders and the events we do around the area.
Another lesson we learned last year was 90% of the events we participated in are from Sept. – mid-Dec. It was very hard last year to make only the soap sold in the 5 days or so between events. This year we are going to participate in bigger events, plus some of the same events from last year. As we get more and more repeat customers, the making just-in-time is going to be harder and harder. So this year we will building inventory of our main products ahead of time.
While we will be adding more inventory earlier, we believe this is the right thing to do this year. We can’t afford to hire someone to work for us and trying to raise two kids while running a business is hard enough to do without pulling all-nighters to make product.
We know it will tie up cash for a little longer but we are willing to take that risk this year. What are your thoughts?