STOCK is MONEY - manage it right, manage it tight.

I've been inspired to write this post as I have noticed there are so many little businesses out there owned by mums that love to sell (&/or make) and never really give much thought to stock and its cost and the importance of having readily available information at their finger tips regarding cost, margins, sales, age etc to create a picture on where they are in their biz thus enabling important decisions to be made quickly & easily. (sorry  - a big sentence!)

It is really important to have a helicopter view of your biz when you sell stock so you understand the relationship between

• buying & selling: lag in between 
• cost price v's sell price
• sell price & discounts / promotion strategy
• margin v's mark up: margin speaks P&L as a margin is a % of sales / ie top line and therefore quickly relates to bankable dollars on your P&L) 
• margin $ v's margin %: a big margin % on a low price item sold in small qty will never bank as much money as an average margin on a high sales volume item. ie no point gloating about a big margin or markup on an item when it doesn't sell much.
• stock age: turn pa, shelf life, seasonal 
• slow and fast movers: freeing up money to buy what sells, ensuring SOH on what sells, tailoring your product range to suit your customer.
• sales reports:  in a)units, b)$ and c) margin $ d) not to mention x customer, x territory, x channel - however you slice & dice it to make the right decisions. 
• customer sales reports: managing key account &/or channel profitability so you understand the true cost of sale as it takes into consideration your management time, promotional costs, shipment costs etc. 
• Gross Profit / Contribution ie True cost sale which is sale price less cost of goods less cost of sale (your time!) less cost of promotion (discounts & give aways) less cost of shipment/storage/ullage etc)

AND how it all relates back to your P&L & Balance sheet because if you are not tracking stock regularly (like daily orders - worst case weekly) by cost and sell price then you can't run an accurate P&L and therefore have no idea how much you make out of sale or if you have a enough money to cover your overheads (fixed costs) or buy more stock. Coupled with that you can't run a balance sheet to see where you are. A balance sheet simply holds your assets -  SOH (Stock on Hand ie the investment of holding all that unsold stock & stock on order)  + your accounts receivable (if you are not pre-payment) and takes off your liabilities (what you owe for stock, wages, ATO, loan etc) to come up with your financial position.

In this day and age there is no excuse for a micro / small biz not to run an online accounting system that manages inventory (ie purchase orders, receive stock, stock list, less items sold, cost of sale) and is linked in with your online shop. Sure, there are fully integrated systems but we are talking something low cost and sometimes even free that is manually assisted so sales and stock are tracked back into the accounting package for easily run reports that tell you what your biz health (wealth) status is instantly - daily, weekly, monthly & quarterly.

It sounds like a lot of paper work but truly, once you get some help to set up your P&L & Balance sheet properly and set up some systems, everything else just falls into place and you have a beautiful (or not so beautiful) picture of where you are sitting.

If you are interested I can share much more detail on this, or pop online some report formats, show you the layout of a P&L that gives you answers, looks like etc. We could also explore some of the accounting packaging and/or online shops that are suited to Australia.

Let us know your thoughts. :)

good-to-go: product sign off

ooh-la-la. Getting closer to setting my brand's launch date after doing some pretty serious sign offs on product today. Big tick items were:

1. Sign off on lippy product costings - production/fill cost
2. Sign off on lippy formulation - base, flavours and shades
3. +ve test results from lab - 3 months with revised packaging
4. Re-designed artwork submitted for test print & production mockup of packaging

I am trying to get the message and words right to describe my product and have had the camera out for weeks bringing ideas to life. My pin board is covered in brochure mockup designs. These are some of the shots from my creative moments..... the kids are (NOT) in the background!

Tho it is good news with all those key sign offs I must dust off my corporate sales hat to bag some chunky sales offline (nooooo not retail - too many hurdles and deadlines for not much margin - aka bankable $$) to get the oils wheeled. By that I mean I want to pre-sell 10K (10,000 units would be REALLY nice tx) to take a big bite out of startup packaging stock requirements. Pre-selling before I buy packaging (my design custom made in Asia) and go to production (out sourced here in beautiful Australia using gorgeous ingredients) means I am not tying up my funds but using someone else's to cashflow my biz.

I am envisaging sales online (my biz model) will take time to build (no I don't have a 20+K subscriber list but would love one if anyone has a creative collaborative idea!!) and the quantity and rate of sales is a relatively 'unknown' so by doing this I reduce risk and as a consequence launch STRESS.....thus keeping me and therefore family happy!

back to core business!

It has been a great couple of weeks but when you work <15hrs a week and ideas outside of your core biz gathers momentum it sure take you off your path. Good lesson but lesson well learned and that is:
- there is a need for home based biz owners to meet in person on an intimate level to share, connect & learn.
- when you are active online doing something that people need/love, your numbers move. I know it is obvious but i saw the power of it which motivates me for the launch of my real biz - luk beautifood. This site/s are my experimental table, where i research, test and implement not to mention meet like-minded people, open doors and get insights into what I didn't know existed.

So today & tomorrow in my 6 hrs is all about getting my sales tool kit finalised so I can do those vital trade presentation to 'catch up big fish' to cash roll my starting stock for online consumer sales! Confused ....see my biz plan via slideshare on the RHS of this blog.

Lippy packaging problems solved?

I just received my 'final' (I hope) development samples of my lippy packaging this week. It is a beautiful creamy colour 'soft touch' wind up 'slim-stick' - that's the techo description! It is very understated and stylish and just the right size to pop in your pocket or purse for a quick 'foodie fix' but boy has it caused me some grief over the last 18 months.

The soft -to-touch coating that gives you a little sensory delight has been cracking under testing conditions of 40+C  filled or not filled. And testing is not a simple matter, first the packaging has to be hand made and shipped from Asia, then we need to be slotted in for lab time, then production trial time. No mean feat in one of Australia's best colour makeup production houses with an awesome team of cosmetic scientists, production guru's and account service queen.

We think the soft touch is not 'giving' on the cap when it is pushed onto the base, and so the little lugs that keep the cap in place are pushing out and causing pressure, because the soft touch coating is strong it must have taken away the 'give' in the plastic and so there is no where to go but to crack.

And, because the packaging was failing we have had to 'abort' some of our stability & compatibility testing several times hence why my launch date is so wide open. So fingers crossed, these little babies will work. I am giving them a lucky send off kiss as I pop them into the post to my development & production team.

Now all we have to do is wait til my beautiful little babies can move up the lab & production queue for more NPD & testing.......

I'll keep you posted!