About This Episode

Have you ever run out of a best seller at the worst possible time while shelves full of other inventory just won't move? The problem usually isn't your buying. It's the missing link between your inventory and your cash.

With holiday buying underway, I walk through how your P&L, balance sheet, and profit plan should drive every inventory decision, the simple open-to-buy formula any store can use, and the two "bumpers" that keep your buying out of the gutter.

In This Episode

• Your P&L is a rearview mirror; your balance sheet is a health check. One shows what already happened, the other shows whether your business can weather a storm.
• Four of the five lines on your P&L are tied to inventory: sales, cost of goods, gross margin, and net profit.
• A sales goal without a profit plan leads to emotional buying and frantic selling. "Last year plus 10%" isn't a plan. Your break-even is.
• Open-to-buy is a guardrail, not the whole system. One client's software kept telling her to buy more because it never looked at her cash.
• The cost of every sale isn't yours to spend. Set it aside each week so the money to restock is already there.

Resources Mentioned