When There is No History, How Do You Buy?

Many small retailers that are just starting their business probably don’t have the knowledge or expertise to order that perfect inventory selection when first starting up. They will need to set a tight budget, probably leaner than they would like and make the constant adjustments as they have a better feel for what their customer base wants. A friend of mine, Alan Fisher, president of Retail Business 101, said buying inventory without a good plan was like throwing mud on the wall, some would stick, but most would slide to the floor. The mess on the floor is the overbought and bad selection purchases that now have to be cleaned up. If your initial inventory is not moving, make that first mark-down as fast as possible and re-invest that cash in inventory that the customer base you are building wants and needs.

Always remember in retail that cash is King, and you have to keep a close eye on cash coming in and going out. But until you have developed the instincts of a seasoned buyer and have established a good history through your POS software, always learn toward under bought as opposed to overbought. Effective inventory management is having the right products in the right place at the right time in the right quantities. You will learn this over time as long as you are conservative in your starting inventory.