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Smart Inventory Buying Tips by Alan Friedman, CPA

Are you considering buying inventory but unsure? Join Alan Friedman as he guides you through key questions and rules for successful inventory purchasing decisions. Find out how to maximize profits, sell quickly, and manage vendor payments effectively.

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Smart Inventory Buying Tips by Alan Friedman, CPA

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Presentation Transcript

  1. I like this product – should I buy it? presented by Alan Friedman, CPA Friedman, Kannenberg & Company, P.C.

  2. When you buy inventory, which one(s) of the following questions are “most” important to ask yourself? • Can I lower my cost for a larger order? • Can I get a discount for early payment? • Can I reorder this product if I run out? • Is this a product my competition sells? • Will I have greater leverage with this supplier if I buy a lot of their product? • Is this a “cool” product and will I gain customer credibility for selling it? • Can I get some vendor rebates, spiffs, trips, prizes, awards or cool T-shirts?

  3. Who ordered this junk?!?!?!

  4. “What” and “How Many” you buy depends ONLYon your answers to these 4 questions: • Can I sell this product ? • Will I make a profit ? • How quick can I sell it ? • How fast will I have to pay my vendor for it ?

  5. (1) Can I Sell This Product? • Is this product really marketable, useable and/or in demand ? • Will “your” customers want to buy this product? • Is your sales rep having a slow month and looking for a sucker?

  6. (2) Will I Make a Profit? • Selling Price $ 1,000 100% • Cost (incl. freight) ( 600) 60% • Gross Profit $ 40040%

  7. (3) How Quick Can I Sell It? • The answer…as soon as possible!! Think in terms of 1-120 days (not 6+ months to sell) • Remember “all” costs (such as the product cost, freight-in, insurance, rent, storage, inter-store transportation, setup, accounting, data entry & tracking, flooring & financing, property tax, breakage, security, shrink, physical inv.) that accumulate from aging inventory Did you know a $100 cost item becomes $130 cost one year later??!!!!!

  8. (4) Vendor Payment Terms? • You must be able to sell most of the product (if not all) “before” your vendor’s payment due date!! • Otherwise, you’ll have cash flow shortages, requiring you to either (a) borrow or invest more money, (b) string your vendors out, or (c) say “good-bye” !!

  9. “ To sell it, at the highest gross profit, in the least amount of time, and never pay for it. ”

  10. Alan’sfor buying inventory

  11. Alan’s “Rule of Thumb” • “Buy the product ONLY IF you know you can sell it in “X” days or less, where “X” is equal to 360 daystimes your gross profit percent. ”

  12. Alan’s “Rule of Thumb”

  13. Top Three Takeaways Here are three takeaways from I Like This Product – Should I Buy It? presented by Alan Friedman. Bring these ideas back to your business and see what results you generate! Takeaway 1: The Four Important Questions: (1) Can I sell it?, (2) Will I make a profit?, (3) How quickly can I sell it?, and (4) How quickly do I have to pay for it? Takeaway 2: Choose another product or reduce the amount you buy until you get the right answers to the four questions Takeaway 3: Always use Alan’s “Rule of Thumb”

  14. “Free” Consulting Meetings Contact Jen outside the Idea Center entrance after this session to set up a meeting time

  15. Enjoy the Show!!

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