Cash flow and forecasting are vital to producers of packaged goods. Unlike service-based business owners, these food entrepreneurs often manage, restock, and sell mass quantities of inventory. To simplify their process and make it efficient, we review and discuss their inventory and financials on a regular basis so they know when it’s time to fulfill orders, test new sales channels, and restock inventory. Here are three inventory management tips we regularly guide our food entrepreneur clients through:
Know Your Inventory
Product-based business owners are responsible for keeping track of inventory at all times. A general perspective of the warehouse won’t do; it has to be down to the pallet level for each specific item. This accurate inventory count makes all the difference when it comes time to creating a budget. A great way to keep careful track of inventory is by using an inventory management system like Dear Inventory. At the end of the month when we review cost of goods sold and net income, we need to be confident that the numbers we’re working with reflect what’s really in the warehouse.
Know Your Timeline
Turnkey co-packers simplify the production process by helping producers alleviate the worry of having to order raw materials to make their product. That being said, producers must pay attention to the time it takes for their co-packer to fulfill orders, as it impacts the overall order timeline. We have a few formulas up our sleeve to create forecasts that help clients manage their inventory purchasing.
Know Your Margins
Before partnering with a manufacturer or distributor, know what your margins are in order to break even or, better yet, make a profit. By working with an outsourced accounting team that has experience in the industry and can provide insight on what these relationships can cost, business owners are in a better position to make smart decisions that impact their bottom line.
Many of our food entrepreneur clients jumped into business because they were passionate about a product they knew we needed—something that would enhance our lives (and taste buds). We like partnering with them to take bookkeeping, accounting, and inventory management off their plate so they can focus on raising money, talking to investors, and sharing their products with the masses. Think we might be able to help you with your inventory management woes?