In my first business, I was selling shoes and clothes. I would go to Divisoria during weekends and then buy the Inventory that I needed.
I thought that if I buy an item for P100 and sell it for P200, I would already be profitable. After all, it’s already twice the cost, right?!
I was dead wrong!
Little did I know that it’s a lot more complicated than that…
First, there are fixed costs like rent and salary that you need to account for. Second, not all your stocks gets sold (e.g. customers want a different color, different size, different style, etc.). Third, those items get out of style.
So if you want to pursue a business that needs you to carry a lot of inventory items, be careful.
You need to monitor your inventory properly and adopt a “just-in-time” method. Or better yet, convince your customers to pre-order, if you can.
Your profit will be greatly affected by how good you manage your stocks.
Do you have a lot of inventory in your business? How do you make sure you avoid overstocking?
COMMENT below to share your thoughts.