Small Biz Millionaire Ep. 4: Inventory
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- Опубликовано: 11 июн 2024
- Today, I want to talk about something important: You want to always be cautious about spending money.
I always have that mindset of how much something costs and how much you actually need,
because the way the vendors work, if you pay on time and you’re buying a decent amount of material, they have what they call "different Matrix’s".
Everybody doesn't get the exact same price.
What they do is they allow the people that buy the most volume, the better pricing.
Then all that's based on:
➡️ Are you always on time?
➡️ Do you always have your invoices paid by the first of the month?
Now a lot of new businesses start getting busy, and they're in a hurry, and they don't pay attention,
and they go to the supply house and they need 2 couplings, or 5 receptacles, or 10 bulbs, and they'll buy 12 of these and 5 of those and 6 of these- sometimes they'll buy twice as much as the need.
You need to try to get it as close as possible. The last thing you want to do is be on the job site need 7, 8’s coupling or a contact or something to fix a repair, whatever it might be, or another gallon of paint.
Your time is your most valuable commodity. You have to be efficient. And you have to be good at what you do.
You got to be thorough, efficient, you got to get done quickly. That's how you make your money,
because once again we all only have the same time in each day.
I had a list that I made and it was the 20 most frequent items that I used.
I would always keep a few extra of those things on my truck.
You might have to add a couple things here and there, but whatever your trade is,
but you'll figure it out.
Okay, now most of us have a little shop, a garage, a building in back of our house, some of us have a shop in an industrial area, which is what I had.
So I had an inventory set up in my shop, based on the volume of work that you're doing, let's just say you're doing $10,000 a month.
You want to keep about 40% in inventory, maybe 50% of inventory of those may be most frequently used items up to 25 or 30, depending on the industry that you’re in.
Some industries require lots of little parts, and some don’t - but don't buy $10,000 in material
when you're on doing $10,000 worth of work, because you're still going to go to the supply house no matter what you do because each job varies a little bit.
You're still going to spend money. So you want to keep your inventory down.
Now, there's a thing called a floor plan that a lot of companies will say, Dave or whatever
I'm going to give you a floor plan and I'm going to put in $5,000 inventory.
What is a floor plan?
A floor plan is where a vendor comes in and he knows that you use these commonly used items,
let's just say there's 50 commonly used items that you use almost all the time, not everyday,
but in a year's time you use them two or three times.
He'll inventory it, then at the end of the month he'll come back and inventory it again,
whatever's missing he'll bill you for it.
That's a great deal if you’ve got control over the inventory, where your
employees are not carrying out more stuff than they need, and it's secure because that will save you time, once again which is most valuable commodity, or going to supply house and spending an
hour paying someone $20 to go pick up a $5 item.
So a floor plan is a good thing to have.
What I do is I would return my unused inventory before I destroyed it each month.
I would get, I had a graph that I would go through and I would buy the first of the month through the 10th.
I would use all the inventory I could all the way through the 20th, after the 23rd - on the 25th
I would return everything so I could get credit by the 1st, then I would pay my invoice by the
1st.
That way I didn't have inventory in stock or in the shop that would get beat up, destroyed, busted, lost, stolen, or unusable for whatever reason.
I wouldn't have hundreds or thousands of dollars tied up in inventory that I would never use.
I would return it.
And that my friend is very important that you learn to return your inventory
because next thing you know if you don't, you have $10,000- $15,000 worth of stuff in a corner that you never use, and that's money that you could have invested in the business.
You could invest it in the trucks you can invest it in good inventory, you can invest it into capital, you know, the capital like retained earnings we've talked about earlier. That's money.
You can't digest material.
I always say I can digest a little labor, but man, materials just don't set well in my stomach.
Okay, so returns are very important. Very important. That's why I wrote that down here.
So, I hope this little segment right here was helpful today. If you have any questions, please leave it in the comments and I'll do my best to answer you back. I have this desire to help people.
I want to pay it forward. If you like this video, please share, please subscribe and please comment, and thank you for watching.
-David
I am so excited about this series. Thank you so much Dave! Can’t wait for the next one!
One of my favorite YT Channels keep up the good work
Thank you Randy I appreciate your support you’ve been there for a long time😊
Thanks for this series David!
Dave we are truly appreciate your years of experiences, research, trial-and-error to bring us a great educational vidoe that some people want to make money on others who doesn't even have it but you are a difference maker. Great educational video keep up the great work. Thanks
I only want to hear about success stories I’m doing my part you do your part😊
Great tips wanna be like you one day, love your channel
I’m sure you can do better than ideal just work hard be honest and you will succeed