Wednesday, 28th September 2022 | Management

Tips for keeping your inventory secured and your brand trustworthy

Inventory management, the practice of having the right–and right amount–of products for sale, isn’t the sexiest part of running a small business but it is crucial. Failure to stay on top of your inventory can cost your company time and money.

Tips for keeping your inventory secured and your brand trustworthy

Inventory management, the practice of having the right–and right amount–of products for sale, isn’t the sexiest part of running a small business but it is crucial. Failure to stay on top of your inventory can cost your company time and money, but even more worryingly, it can destroy your reputation with your customers. Like supply chain management in general, inventory management is largely a matter of planning and organization. Read on for top tips on how to make sure you don’t have to tell your customers you’re sold out.

What is inventory management?

Your job as a small business owner is to meet the demand of your customers by supplying them with the products they want, when they want. It sounds simple enough, but businesses can’t just order as much as possible. There are costs associated with carrying excess inventory, and you can lose money if you have to sell off product at deep discounts. Foreseeing customer taste and demand is a key component of inventory management, and when done correctly, it will boost your business and help foster customer loyalty.

Why is inventory management important to your business? 

According to Software Path, only about 18% of small businesses use an inventory tool, and nearly half–43%--either don’t track inventory at all or they do so manually. This means that these businesses are making stocking decisions without the pertinent data. This can lead to having too much or too little stock, cash flow problems, and a disorganized budget. By regularly surveying your inventory, you can make informed business decisions to ensure you’ll continue to profit. 

Additionally (and importantly), a well-managed inventory will help ensure that you have the stock your customers want, when they want it. This directly affects sales, but it also demonstrates good business practices to your customers.

Top 4 inventory management tips for your business

Stay informed and be strategic

Prioritize taking stock of your…stock. Regularly assessing your inventory will enable you to make informed decisions about how much product you need–and how much you might need in the future. Include inventory management in your everyday operations to take the guesswork out of ordering.

Listen to your customers

If you and your staff aren’t paying attention to your customers’ requests, you’re leaving money on the table. Train your staff to note what your customers are asking for and to take these requests to management. Analyze your competition and see what they’re carrying. Be proactive in researching and analyzing the best products on the market.

Observe and anticipate seasonal trends 

Every business experiences ebbs and flows and your ordering behaviour should reflect that. Document sales data over time so you can predict peaks and valleys, and secure inventory accordingly. 

Use promotions strategically 

Even the most well-managed businesses end up with overstock from time to time. If you’ve got product you need to move, you can set up a promotion to entice buyers. Be strategic about the deals you're offering. Too deep a discount can lose you money so aim for the highest sale price that will move your product. 

If you want to compete in your marketplace, inventory management is key. By prioritizing regular assessments you can track your expenditures, purchase strategically, and keep your customers happy.

 

Read Also

5 Tips for Your Small Businesses for the Holiday Season

Set your goals

It’s always a good idea to have a plan to meet your goals, and your sales goals are no different. Set a realistic goal for your holiday season, and make sure you account for metrics other than revenue. Customer engagement and social media following are also important. 

Think about seasonal milestones like Black Friday and Small Business Saturday, and strategize about how you’ll leverage them in your overall plan. If you’re at loose ends, take a look at what your competitors are doing. Track where they’re advertising and what kinds of promotions they’re running.

Finally, track what works and what doesn’t. Planning doesn’t end just because it’s after New Year’s–you can take what you learned into the following seasons. 

Create a marketing plan

You might already have a loyal customer base but the holiday season is the perfect time to attract new attention. People are primed to purchase, so they’re seeking out advertising. Get your name out there to acquire new customers, enrich your relationships with existing customers, and drive sales.

Your marketing plan should cover the what, how, and where you’ll advertise. Make sure you prioritize the marketing channels that matter. At a minimum, you should revisit your online presence, ensuring that your web site and social media channels are up-to-date and active. Also consider paid options like Google Search Ads and social media ads. 

Stock up on inventory

All your goal setting and strategic planning will be for naught if your shelves are bare when your customers arrive. Now is the time to survey your sales numbers from last year. Account for any changes (if your marketing is successful, for example, you may have more demand), and get your orders in. The last thing you want to do is to give your customers a reason to seek out your competitors.

Attract customers with promotions and sales

Holiday shopping is extremely competitive so you’ll want to give your potential customers as many reasons as possible to visit your store. Store-wide or specific sales may entice your customers but you can make things more interesting and set yourself apart with promotional discounts like early bird specials, discounts, or free shipping. Make those on your email lists or social media feel special with targeted incentives like coupons or exclusive deals. Consider bonus offers. Also, don’t ignore end-of-season sales opportunities. You can capitalize on the momentum you’ve created with deep discounts that will help you maintain customer attention and clear overstock or excess inventory. 

With all these strategies it’s a good idea to beta test them before a complete roll-out so you can hit the right balance and get customer attention while still turning a profit.

Open an online storefront

Whether you offer an online shopping experience or not, it’s a good idea to go at least partly digital over the holidays. Online shopping is very popular and shopper fatigue is real. Start by making sure everything on your existing web site is complete and current, and that any shopping capabilities you have are in perfect working order–including on mobile. 

If you have little or no online purchasing capabilities, consider connecting to a service like Shopify, or leveraging Facebook Shops or Instagram Shopping to show off your wares. 

The holiday season is a key part of your sales cycle. With a bit of planning and preparation, you can strengthen your relationship with current customers and attract new customers, all while hitting your sales targets.

 

Marketing

Empowering Your Small Business With The Means to Market

The thing is, when you’re an SMB, it can be tricky to figure out just how much you should be spending. The answer, of course, is it depends–-on your industry, your goals, and your costs. Still, setting aside money for marketing is not a nice-to-have. You’ll have to market yourself if you want to compete. 

Why is marketing so important? 

Marketing is the tool businesses can use to introduce themselves, to engage with potential customers, to drive sales, and to foster loyalty. Without it, you’re missing an integral piece of your business model. While word-of-mouth is one way to get customers, it’s not easy to reach people as regularly and in sufficient numbers as you’ll need to sustain your business. Here’s where to set aside some budget.

Invest in awareness 

Marketing encourages interest in your products and services which is why you can’t afford to do without it. 

Marketing for customer acquisition is a strategy that tries to reach customers who’ve never bought from your company before. It’s obvious why this is important: your customers are the ones who make purchases. 

Customer retention marketing focuses on nurturing existing relationships to make sure that your clients will not only want to be repeat customers, but also want to refer your business to their friends. Leveraging customer loyalty is not only good business sense, it’s also generally more affordable than attracting new customers. 

Budget for marketing 

You’ll need to invest strategically in your marketing, whether in traditional methods like newspaper or television, or in digital advertising platforms alone. In any case, you need your business to be on the internet. In some cases a simple (but well-written and SEO-friendly) website showing location, services, and hours will suffice. Other businesses will need something a little more robust.

Social media is just as important when it comes to your digital presence. Consider having at least one account on a top platform where you can publish contests, promotions, or interesting news from your industry. Social media is a powerful way to direct customers to your main site or to make sales. 

Managing your marketing budget 

Your business needs a marketing budget, but how much should you be spending? The most effective way to assess a realistic but effective marketing budget is to research, measure, and then evaluate. 

You can arrive at a preliminary budget by looking at your revenue and determining what strategy will most help you reach your goals. For example, are you hoping to get more customers, have your current customers make more purchases, or have your customers pay more for more premium products or services? 

Make sure that you have clearly defined and measurable goals. If you’re looking to increase web traffic, determine how many site visits you’re aiming for. If you want to see more engagement with a certain market segment, define as many characteristics as possible. This kind of granular thinking will enable your marketing team to tailor their efforts to your desired outcomes. 

Record what you spend on each kind of marketing so that you can measure the return on investment and refine your efforts going forward. 

Finally, schedule a review each quarter and adjust your budget accordingly. 

Marketing will help your business meet its goals–but only if you invest in it. If you need help budgeting for your marketing plan, iCapital can help. Contact us here. 

 

Blog ,Marketing

How small business owners can protect themselves against rising inflation

How small business owners can protect themselves against rising inflation 

Inflation describes an increase in the cost of consumer goods and services. It’s a simple concept with complex causes but it’s certain that the COVID-19 pandemic has played a significant role in the spiking costs faced by Canadians. In January 2022, the inflation rate was a little over 5% compared to the previous year for consumers, with many businesses experiencing even higher increases. For Canada’s SMBs, this means rising prices and tighter profit margins.

If your business has yet to suffer the effects of inflation, it’s likely only a matter of time. Although costs don’t always rise at the notable levels we’ve seen this past year, inflation is an ongoing process so your best bet is to be proactive.

Inflation management strategies for your small business

Focus on growth 

In dealing with rising prices and shrinking profit margins, small businesses will have to choose between severe austerity or a growth mindset. In the former strategy, you cut all but the absolutely essential expenses and try to hang on until things improve. (Spoiler: inflation is continuous.) The problem with this strategy is that you won’t be in a position to invest in your business so the likelihood of it surviving is painfully low. 

Rather than trying to wait things out, focus instead on growth. Review your profit margins regularly and no less frequently than quarterly to make sure you can adjust to maintain your cash flow. This will help you maintain some certainty even while the markets fluctuate. By moving forward with a plan, you may well be giving yourself a better chance at success in both the short- and longer-term. 

Review your gross profit margins

Setting your prices to match inflation rates is inefficient and can alienate your customers. Instead of posting fluctuating prices, build some room for adjustment into your everyday rates so you can be nimble in the face of instability without blowing your margins. 

Look for savings

A growth mindset doesn’t preempt smart financial decision-making. Look at your indirect costs to see if there are places you can cut unnecessary expenses. Review your overhead expenses, software and media subscriptions, administration costs, and other operational items. Consider automation where you can. It streamlines processes, reduces errors, and can save you time and money. 

Be smart about borrowing

Borrowing can be a sound choice, provided it's done at the right time and the right terms. If you foresee running up against cash flow issues, don’t hesitate. Borrow the money you need to keep operating. There are online tools to help you predict trends so aim to borrow at favourable rates. You can select a fixed rate loan to protect your repayment terms. Similarly, consider moving high-interest credit card debt to loans with lower rates.

Current inflation rates are a concern for Canadian small business owners but there are strategies to maintain operations. The tips above will not only help you weather this storm, but will also help you prepare for the next. 

 

Accounting ,Management

Can I get a business loan to buy a business?

Why purchasing a small business in Canada could be beneficial

Purchasing a business in Canada might be a cost-effective strategy to grow your customer base, expand your capacity, or enter new markets. You may even buy a competitor's or supplier's company.

Purchasing an existing firm has several advantages 

There are many advantages to buying a business or an established firm. For example, the product or service that the company provides is already well-positioned in the market, the personnel is well-trained, and the supplier network and distribution channels are well-established.

However, if you are purchasing a failing firm, you must first obtain a thorough grasp of the reasons for the failure and then carefully examine if you have what it takes to turn things around.

The maximum amount of money you may borrow to acquire a business

The amount of money a lender is willing to provide for a business acquisition loan varies significantly from one company to the next. The value of the assets you're using as collateral, your cash flow, your credit score, and your firm's financial health are all factors that influence loan amounts. Depending on these characteristics, lenders may provide as little as $250,000 or as much as $35 million. 

The lengths of company purchase loans in Canada vary, although they commonly range from three to 10 years.

Financial options when buying a business

There are various methods for getting a loan to buy a business in Canada, so you need to weigh all of your options before deciding on the best financing arrangement.

Self-funding

It is the shortest method since you fund the transaction with your own money. However, in many circumstances, this cash isn't available or isn't available in significant amounts, so you'll need to look into alternative financing possibilities. Read on for a list of options.

Financing from the seller

Some business owners selling their companies are prepared to lend money to potential purchasers. When this occurs, it typically indicates that the seller believes in the business or the buyer's ability to operate the firm successfully after purchase. However, it might also suggest a restricted market for the firm being sold, and the seller is attempting to entice possible purchasers. As a result, you should think about the reasoning behind the seller's decision to finance, as it may affect your negotiating position. 

In most cases, seller financing does not cover the entire purchase price. Therefore, you will need to make a down payment as a buyer. However, you can cover the down payment with a secondary funding source, such as one of the other choices indicated in our article. There are no particular qualifications for seller financing because each seller will have their own set of requirements. Some will want to see a decent credit score, although you do not have to be a top borrower.

Getting a bank loan

Banks are typically hesitant to provide money for business purchases. However, you may want to consider this option which allows you to get a small business loan in Canada for various purposes, including acquiring an existing firm. You might also want to look into the Business Development Bank of Canada, which has several long-term funding alternatives based on your circumstances. Financing options specifically designed for the purchase of a business include vendor take-back financing; unsecured loans for intangible assets such as intellectual property, goodwill, and client lists; long-term loans based on the value of fixed assets such as land, buildings, equipment, or shares in an existing business.

Buyout with leverage

The firm's assets you're buying (equipment, property, or inventory) are used to fund the acquisition in this financing arrangement. A mix of seller finance and a bank loan is used in most leveraged buyouts. It is highly typical, as business purchases frequently include various financial sources.

Online Lenders

iCapital is one of the most trusted online lenders in Canada offering loans to businesses. You can qualify for up to $250,000 with iCapital in as little as 48 hours. Our application process is fairly straightforward and loan approval is as high as 98%. Connect with us to discuss your financial plans and needs and we will work out the best strategy for you.

Things to consider when buying a business

  • Debt assumption: When purchasing a firm, you must decide whether you want to acquire the assets or the entire company, including assets and liabilities (debt).
  • Purchase financing: When buying a firm, keep in mind the finances you'll need to manage once you've bought it. After making your purchase, you'll have several financing choices for getting a business loan.
  • Self-funding and cash reserve: In an ideal world, a company's activities would be financed by its cash reserves once it is purchased. However, you may need to bring in more money if they aren't adequate.
  • Line of credit: When your company has a business line of credit, you may borrow up to a particular amount and pay interest on the amount you borrowed. A line of credit is helpful since it provides your firm with rapid access to cash, up to a pre-determined credit limit, similar to business credit cards.
  • Financing for invoices: Invoice financing refers to financial agreements that enable you to finance your company's invoice receivables. Small firms utilize it to boost their working capital and cash flow by fulfilling short-term liquidity demands. Invoice discounting and factoring are the two most popular options.

Why iCapital?

A loan can be used to purchase a firm from an existing owner in Canada. You can use various financing options to finance the purchase. You should evaluate which funding option will work best for you and then decide whether you should invest in the purchase.

Are you interested in learning more about this? Contact iCapital at 1.877.251.7171 to get a loan to buy a business using our straightforward procedures.

Small business financing Canada ,Management

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