When you are entering the realm of running your own business, there are a lot of things that require your attention daily: from relationships with vendors to opportunities to reach out to new clients to managing your employees properly. But when you are in the retail business, then the heart of your company is the one thing that needs to be put as a priority every day: your inventory. It is crucial that your inventory is managed properly every single business day – so do not wait until the end of the year to start implementing these tips.
Understand the Advantages of Managing Your Inventory
Imagine the trouble that comes with not having enough products to respond to orders or of having ordered too much stock that sits idly on the self – or worse, goes spoiled. There are many advantages to managing your inventory correctly, and the first one is that it saves you money. You avoid losses that come with products that can no longer be sold because they reached their expiry date – like food – or because they have gone out of style or season or have become obsolete, like clothes or gadgets. It also helps save on the cost of renting out space that you might not need – or renting out too much space for idle produce that you are not making money on. Proper inventory management can help you cut back on all those costs and keep your cash invested where it really matters, while it can also allow you to make more accurate financial projections and manage your resources more efficiently.
Set Your Minimum Stock Levels
It requires some research and effort on your part, but the first thing you need to do is understand your company’s needs. Start by counting and comparing: how many goods have you sold each month and how does that fluctuate with seasonal demand? That will give you an idea of the quantity of products you need to keep available every time. By setting a minimum amount that you need to have in stock every time for each of the products you sell, you will be able to react quickly every time your stock is approaching that limit by ordering more before you sell out. The minimum stock level will depend on various factors, such as the demand for the product, how quickly your stock order can get through, as well as how easy it is for the goods to go bad – it makes sense to set lower minimum levels for goods that will go bad if you do not sell them quickly. Remember to always revisit the minimum stock levels you have set throughout the year and readjust if they do not reflect your real needs any more.
Invest in a Plan B
Even if you have set out the more detailed inventory management plan, you might encounter an unforeseen surge or slump – so it is always important to keep your options open and know where you can turn to. One of the best ways to do that is to research your options when it comes to inventory loans and financing. These are short-term loans or revolving lines of credit that are
specifically designed for companies looking for quick funding solutions in order to replenish their inventory. They are usually flexible and come with favorable terms, as they are meant to be a tool to address seasonal fluctuations and not a standing financing mechanism. They are typically secured through your current inventory, so they do not require you to give up any additional collateral. Inventory loans are also quite quick to process and do not require any personal credit score. However, they are not always easy to qualify for, so it is advisable to do some research beforehand; even if you do not foresee that you will need inventory financing in the near future, knowing the types of financing available to you might come in handy when you need to react quickly.
Your Employees Are Your Best Allies
One common misconception among entrepreneurs is that you need to do everything yourself; to the contrary, making sure that you allocate tasks to your employees is key for efficiently running your business. More often than not, your employees are the ones that will manage your inventory daily, so they need to be prepared. Perhaps the most essential skill that you need to make sure they have in order to successfully manage your inventory is proper cataloguing and tracking your inventory goods. Do not hesitate to invest resources and time in training them on best practices in order to organize your inventory in the most effective manner – and also make sure that you regularly get feedback from them on what works and what not in order to finetune the details. It is advisable to put a specific employee in charge of your inventory in regular intervals in order to have a person of reference that you can talk with directly about your current needs in terms of stock.
Keeping track of what goes in and out and making sure that you never run out of stock nor stock up too much – they may sound pretty straightforward goals, but it takes a lot of organizing and testing in order to get things just right.
Business entities can be defined as the corporate, tax and legal structures which an organization chooses to officially follow at the time of its official registration with the state authorities. In total, there are fifteen different types of business entities, which would be the following.
- Sole Proprietorship
- General Partnership
- Limited Partnership or LP
- Limited Liability Partnership or LLP
- Limited Liability Limited Partnership or LLLP
- Limited Liability Company or LLC
- Professional LLC
- Professional Corporation
- Nonprofit Organization
- Cooperative Organization
As estates, municipalities and nonprofits do not concern the main topic here, the following discussions will exclude the three.
Importance of the State: The Same Corporate Structure Will Vary from State to State
All organizations must register themselves as entities at the state level in United States, so the rules and regulations governing them differ quite a bit, based on the state in question.
What this means is that a Texas LLC for example will not operate under the same rules and regulations as an LLC registered in New York. Also, an LLC in Texas can have the same name as another company that is registered in a different state, but it's not advisable given how difficult it could become in the future while filing for patents.
To know more about such quirks and step-by-step instructions on how to start an LLC in Texas, visit howtostartanllc.com, and you could get started with the online process immediately. The information and services on the website are not just limited to Texas LLC organizations either, but they have a dedicated page for guiding fresh entrepreneurs through the corporate tax structures in every state.
Sole Proprietorship: Default for Freelancers and Consultants
There is only one owner or head in a sole proprietorship, and that's what makes it ideal for one-man businesses that deal with freelance work and consulting services. Single man sole proprietorships are automatic in nature, therefore, registration with the state is unnecessary.
Sole proprietorships are also suited to a degree for singular teams such as a small construction crew, a group of handymen, or even miniature establishments in retail. Also, this puts the owner's personal financial status at jeopardy.
Due to the fact that a sole proprietorship entity puts all responsibilities for paying taxes and returning loans, it directly jeopardizes the sole proprietor's personal belongings in case of a lawsuit, or even after a failed loan repayment.
This is the main reason why even the most miniature establishments find LLCs to be a better option, but this is not the only reason either. Sole proprietors also find it hard to start their business credit or even get significant business loans.
General Partnership: Equal Responsibilities
The only significant difference between a General Partnership and a Sole Proprietorship is the fact that two or more owners share responsibilities and liabilities equally in a General Partnership, as opposed to there being only one responsible and liable party in the latter. Other than that, they more or less share the same pros and cons.
Registration with the state is not necessary in most cases, and although it still puts the finances of the business owners at risk here, the partnership divides the liability, making it a slightly better option than sole proprietorship for small teams of skilled workers or even small restaurants and such.
Limited Partnership: Active and Investing Partners
A Limited Partnership (LP) has to be registered with a state and whether it has just two or more partners, there are two different types of partners in all LP establishments.
The active partner or the general partner is the one who is responsible and liable for operating the business in its entirety. The silent or investing partner, on the other hand, is the one who invests funds or other resources into the organization. The latter has very limited liability or control over the company's operations.
It's a perfect way for investors to put their money into a sector that they are personally not experienced with, but have access to people who do. From the perspective of the general partners, they have similar responsibilities and liabilities to those in a general partnership.
It's the default strategy for startups to find funding and as long as the idea is sound, it has made way for multiple successful entrepreneurial ventures in the recent past. However, personal liability still looms as a dangerous prospect for the active partners to consider.
Limited Liability Company and Professional LLC
Small businesses have no better entity structure to follow than the LLC, given that it takes multiple good ideas from various corporate structures, virtually eliminating most cons that are inherent to them. Any and all small businesses that are in a position to or are in requirement of signing up with their respective state, usually choose an LLC entity because of the following reasons:
- It removes the dangerous aspect of personal liability if the business falls in debt or is sued for reparations
- The state offers the choice of choosing between corporation and partnership tax slabs
- The limited legalities and paperwork make it suited for small businesses
While more expensive than a general partnership or a sole proprietorship, a professional LLC is going to be a much safer choice for freelancers and consultants, especially if it involves risk of any kind. This makes it ideal for even single man businesses such a physician's practice or the consultancy services of an accountant.
B, C and S-Corporation
By definition, all corporation entities share most of the same attributes and as the term suggests, they're more suited for larger or at least medium sized businesses in any sector. The differences between the three are vast once you delve into the tax structures which govern each entity.
However, the basic differences can be observed by simply taking a look at each of their definitive descriptions, as stated below.
C-Corporation – This is the default corporate entity for large or medium-large businesses, complete with a board of directors, a CEO/CEOs, other executive officers and shareholders.
The shareholders or owners are not liable for debts or legal dispute settlements in a C-Corporation, and they may qualify for lower tax slabs than is possible in any other corporate structure. On becoming big enough, they also have the option to become a publicly traded company, which is ideal for generating growth investments.
B- Corporation – the same rules apply as a C-Corporation, but due to their registered and certified commitment to social and environmental standards maintenance, B-Corporations will have a more lenient tax structure to deal with.
S-Corporation – Almost identical to a C-Corporation, the difference is in scale, as S-Corporations are only meant for small businesses, general partnerships and even sole proprietors. The main difference here is that due to the creation of a pass-through entity, aka a S-Corporation, the owner/owners do not have liability for business debt and legal disputes. They also are not taxed on the corporate slab.
Cooperative: Limited Application
A cooperation structure in most cases is a voluntary partnership of limited responsibilities that binds people in mutual interest - it is an inefficient structure due to the voluntary nature of its legal bindings, which often makes it unsuitable for traditional business operations. Nevertheless, the limited liability clause exempts all members of a cooperative from having personal liability for paying debts and settling claims.
This should clear up most of the confusion surrounding the core concepts and their suitability. In case you are wondering why the Professional Corporation structure wasn't mentioned, then that's because it has very limited applications. Meant for self-employed, skilled professionals or small organizations founded by them, they have less appeal now in comparison to an LLC or an S-Corporation.