Sunday, November 9, 2008

Trumped the bump.

Not much new to report on the Pegasus front. I've settled into a new range of purchases and sales; I expect that Christmas won't be canceled, but I'm also not expecting too much. I'm expecting the first part of next year to be horrid, but again I can handle that if I order properly.

We didn't see an Obama/post election bump; but the weather changed at almost the same moment, and I think the weather trumped the bump.

Linda's store has proven to be very resilient in the face of the slowdown. She's not getting quite the same rate of growth, but she's doing all right.

The biggest problem developing for my store is what I call 'spot shortages.'

When sales are high, it seems as though the cash flow covers everything; that is, if I have 8 categories of product, and I have to order 80% of the good stuff each month to keep them up, I sell just enough overall to keep that going. I might sell 60% of one category, and 90% of another, and 75% of another, but it more or less evens out over the long run.

When sales are lower, one category can sell very well, can sell completely out, while the other categories aren't doing so well. That means the cash is frozen in non-selling inventory.

What to do?

Well, I can just sit and wait for enough of the slower moving product to sell to be able to cover the spot shortage. This is what I've had to do in the past when things were dicey and I couldn't take any risk, and/or I had no capital to dip into.

But obviously, this means that the category that is short is actually the category that was selling. Pretty dumb to let that lay fallow.

The other solution is to actually dip into saving to buy the hotter product, and commit myself to replacing the borrowed money when some of the slower product finally sells.

This is a perfectly good solution, as long as I'm disciplined enough to replace the borrow money, which I haven't been too good about in the past.

Then again, I've managed to do a lot of disciplined things this year that I haven't been too good about in the past. So, yeah. I'll keep the inventory up.

But spot shortages are a pain in the ass.


Anonymous said...

Did you know that each aerial application of Checkmate OLR-F and Checkmate LBAM-F costs approximately $3.5 million and that $3 million is paid directly to the manufacturer Suterra, LLC of Bend, Oregon?

RDC said...

I would be surprised if it wasn't. After all aren't they the manufacturer of the product. Doesn't one usually pay the manufacturer for a product when it is used?