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Give Your Business a Good Cleaning

by Chris Polek · Polek & Polek · July 1, 2008 - page(s): 56-57

Summer is here, and along with the nice weather, it’s an opportunity to open up the windows and air out your business. Here are a few questions that can help your business get a fresh feel as you enter the third quarter of 2008.

How frequently does your inventory turn?

With the economy tightening up and daily headlines about the credit crunch, it is even more difficult than before for businesses to acquire new capital. Reducing your inventory levels is a self-sufficient way for you to free up more cash for your business. What type of inventory levels can you keep without declining service to your customers? What are your lead times? Take a look at your inventory levels and determine how many months of inventory you are carrying. If you want to get your inventories lean and mean, your mantra needs to be: buy less, and buy often.

What are you doing to liquidate slow moving or obsolete inventory?

Did you come up with a higher inventory level than you would like? Take another closer look and see how much of that inventory are slow or obsolete items. Whatever that dollar amount is, it will always be there until you take action to liquidate it. If it is over one year old, get rid of it ASAP. Even if you sell it at or below cost, it is better than continuing to sit on your warehouse floor. Every month it will be more difficult to sell.

How much space is your inventory costing you?

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