Achieving Balance Between Sales and Inventory

by Steve Pruitt

AsktheExpertsQ: I’m analyzing my business to get a better idea of how I can balance my purchases with my sales. Do you have any tips?

A: The key word that you used was balance. Whether you are looking at a category, or a particular vendor in your store, you want to make sure that the sales, margin, on-hand inventory and on-order amounts are in balance with one another.

So, if suits represent 20 percent of your sales, they should also represent 20 percent of your inventory, 20 percent of your margin, and 20 percent of your on order.

You can use this criteria broadly, such as in the category example I just gave, or in a more defined way, such as looking at a vendor in a certain category. Either way, it is a good test to see if your buying habits are in balance with your sales. Good luck and thanks for the great question.