A new year brings new trends and whether you’re launching a plant-based supplement line or an ethical CBD brand—we’re here with you every step of the way. We’ll help you navigate bookkeeping for product-based businesses and support you as you get your idea off the ground. We’ll keep you (and your business) on track for growth and be your sounding board as you consider new opportunities.
Additionally, we’ll remind you that while it’s great to capitalize on industry trends, it’s always important to stick to some essential bookkeeping basics. For food entrepreneurs, that means understanding your inventory at a cellular level. Get your new year started off strong and remember the following things about inventory and inventory management:
Know Your Cost
It doesn’t matter if you’re using a turnkey copacker or manufacturing your product, you must understand the true cost of your product and remember that inventory includes more than just the end unit. If you overlook the cost of your labels, boxes, shipping, and anything else that factors into the finished good, your margins will be skewed and you won’t make the profit you were anticipating. Working with an outsourced bookkeeping and accounting firm like Accountfully can alleviate the confusion associated with your cost of goods. Not only do we use tools like Fathom to show our food entrepreneur clients different margins by sales channel based off cost of goods, we also have regular inventory updates to help them plan for inventory purchasing.
Know Your Timeline
Inventory planning is an important part of operating a successful product-based business. While turnkey copackers simplify the production process, producers must pay attention to the time it takes for their co-packer to fulfill orders, as it impacts the overall order timeline. We work closely with our clients to help them manage their copacker timelines so they can understand how long capital will be tied up. And if you’re manufacturing your product, we help you understand trends and patterns associated with raw material delivery timelines and when it’s time to reorder and restock the things you need to create your product.
Know Your Counts
Don’t underestimate the importance of inventory management. Knowing how much it costs to make your product is great—but to be successful you also need to know how much of your product is in the warehouse. Keeping up-to-date inventory counts is a mandatory part of running your product-based business. Thankfully, there are a number of inventory management systems like Dear Inventory that can be implemented and leveraged by food entrepreneurs. Moreover, outsourced bookkeeping and accounting teams that have product-based business experience can manage the implementation and help you know when it’s time to make the move to something more powerful and robust than an Excel spreadsheet.
Proactive business management will never go out of style, which is why it is at the cornerstone of everything we do here at Accountfully. If you’re a food entrepreneur, your inventory will always be at the center of your business’ success. As such, it’s important to work with a team that can help you understand and leverage your cost of goods sold, inventory purchasing, and inventory management. Want to learn more about inventory management for food entrepreneurs? Check out our guide and schedule a time to chat with one of our experienced team members.