Take Stock in a Positive Outlook for 2017

Do you have a positive outlook for your business in 2017?

A lot of US businesses (and consumers) do. Reports indicate they ended 2016 with a positive outlook on the economy. It could be a very good year.

The monthly Consumer Confidence Index rose from 109.4 in November to 113.7 in December, its highest level since August 2001. Americans perceived strength ahead in business conditions.

Another monthly survey reports that owners of firms with 500 or fewer employees are more hopeful about the economy than they’ve been since 1980. Half of the 619 surveyed owners said in December that they expect the economy to improve, up from 12% in November.

The report says that a slight bump in average inventory levels may be a sign of increased consumer demand and an indicator that these companies are putting their money where their positive outlooks are.

Some in the financial media have called this surge of hope the Trump Bump, a perception that the incoming presidential administration will create a tax and regulatory environment more favorable to conducting business.

Manage Inventory For a More Positive Outlook

Whether you’re an optimist or not, your business will only improve if you keep a rein on inventory. Here are a few ways it helps:

• Determining what your basic stock levels should be is the only way to go. Experts say competitive businesses will carry a reasonable assortment of products with enough stock to cover normal demand. You can figure out what normal demand is by reviewing sales figures from the previous year. A new company can base stock levels on its business plan.
• Sales data help you prioritize your inventory. Businesses fall into a cash-flow trap if they spend too much money stocking slow-moving (but expensive) products, while neglecting to maintain sufficient stock levels of less expensive items with higher turnover. A good inventory tracking solution enables you to sort your best sellers from your slow-movers. With that information, a business will know when profitable items should be replenished, and what products may need to be sold at markdown or phased out completely.
• Finding those optimal inventory levels will save you money. Running out of stock results in lost sales and costly, time-consuming back-orders, and running out of raw materials will increase operating costs. This is the argument for building in safety stock to your basic inventory figures, a figure determined by outside factors, such as delays in shipping from far off suppliers. Experience will give you a better handle on delivery times to calculate that safety stock. On the flip side, excess inventory will cost you.This is especially true for apparel, home accessories, and holiday items, items that can be hard to sell when out of season. Excess inventory leads to higher overhead in storage costs.