In today’s climate of uncertainty making any move or decision in your business can be daunting. Should I buy more supplies now? Do I hold on releasing my latest product/design? Should I just shut it all down until the storm passes? WHAT IS HAPPENING RIGHT NOW?!
I recently read an article where the author was suggesting that product business halt new releases and it really struck a chord with me. This advice, while sensible, isn’t a one size fits all approach to your product business. Also, as a maker, you find solace living in a creative space. Creating something new is what may keep you sane. You launched your business because you have a passion for product that runs DEEP. Now more than ever, it’s important to take all the information that is being shared out there and develop your own plan specific to your business (my advice included!)
When cash is slow and uncertain you should be careful about how you allocate every dollar. HOWEVER if you do have funds set aside now can be a great time to take advantage of extra savings companies are offering to bulk up on supplies and necessities for your business. How do you know what you can afford? It all goes back to knowing your numbers:
Start with an Inventory Assessment-what you have on hand in finished product, what you have on hand that needs finishing, and what you need component wise to create (may have more supplies OH than you think)
Convert your on hand inventory into $. Know what you own at cost/wholesale/retail (if DTC skip WH step) For instance, I have 10 pairs of earrings on hand, COG 1.25. WH $7.00, RT $15. Open Google Docs or Excel and create a spreadsheet with columns:
Item/Product
Units on Hand
$ at Cost
$ at Wholesale
$ at Retail
Create a detailed inventory spreadsheet so you know EXACTLY how much you own. We also have a template in the shop to help you set this up quickly. You can grab it here.
Identify any gaps in your inventory and supplies. What do you absolutely need in order to have a saleable product? What can you hold off on? Do you have enough on hand to work with for now? What components + supplies are the most important to your business?
Once you’ve reviewed your needs and areas of opportunity see if you can allocate and dollars to take advantage of sales from your suppliers. Getting components at a great price can help you boost your margins which will be especially helpful as everyone begins to compete over $$ and you see sales discounts being offered by your competitors and larger retailers increase, and you start to feel the pressure to discount heavily. (it will happen!)
Review your promotional strategy. You don’t want to fire sale and borderline give away products due to panic and what everyone else is doing, see what is realistic. Review your promotional history to see what worked well and consider if investing in lower priced components would be a good thing to do right now, or if holding off is the best strategy for you.
There is no magic number when it comes to what you should be spending/saving in your business right now. Having an in depth knowledge of your expenses and inventory dollars will put you in a better position to take advantage of deals, ensure your promotional strategy isn’t too aggressive and decide if launching your latest product is the best thing for YOUR business.