I know that writing about budgeting is probably the most boring thing I do here.
It's probably the most important thing I do at the store.
I'm at one of those decision points, that might make the difference between earning a profit and not earning a profit at Christmas.
Here's the situation.
In about 5 days, I will be in the January billing period. My budget isn't lavish for January, but it isn't skimpy either.
Meanwhile, I've pretty much spent my entire December budget.
So wait five days, right?
Generally, I find if I can just fight the temptation to start spending next months money early, that I'll be glad a did about this time next month. Easy to borrow off the future, tough to pay it back.
Then again, there are only about 14 days left in the Christmas shopping season. If I wait the full 5 days, it spills into next weekend for shipping, which mean I won't get product until 5 days before Christmas.
If I make my orders today, it ships tomorrow, gets here on Wednesday, and I have the product for the last 10 days before Christmas.
Then again, if I wait five more days, I'll have one last chance to get those special orders that might come in, or to replace spot shortages just before Christmas.
This may sound contradictory, but I've learned that I both: need product more in slow times, but need order product less in slow times. Especially, when everyone takes a breather after Christmas. It's traditional, almost, to sell off as much remaining inventory as possible in the week after Christmas....
Of course, what I'd really like to do is order today, AND order another batch in about week.
But that really would blow the budget out of the water.
You'd think after all these years I'd have figured out the best way to do things, but since I'll never entirely figure out customer behavior, I'll never probably get it quite right. I don't really even know, yet, if this Christmas is going to be good, bad, or somewhere in-between.
My inclination, as those who read this blog know, is to order the product today -- and try to address any shortfalls in January. But I don't know as I quite trust my inclinations -- I always seem to be playing catch-up.
Here's what I think is a deciding factor: I can order the stuff to arrive on Wednesday, and have five more days to see if sales are any good, and whether a second smaller order is possible.
Or I just take a breather for a couple of weeks.
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4 comments:
The "Wait until the last minute for the best deals!" monster the mass market has created has made it all the harder to budget.
For instance -- I could easily construct a scenario where I only sell three more Settlers of Catan between now and Christmas.
But I can create an equally valid scenario where I could sell a dozen.
I won't know until it happens.
So I compromise and get 8.
So, chances are very good I'll look back and go:
"Stupid! You could have sold 4 more copies!"
Or
"Stupid! Now you're sitting on 5 extra copies!"
You know, obvious in hindsight.
So if it's a good product, why not buy extra and if it doesn't sell, you'll still have it for the future.
Aha.
Now you know retailer temptation. Like original sin. Very seductive.
Because in the first scenario, I make full profit, and in the second scenario, if it doesn't pan out, I have actually lost money (except I own more inventory, which is considered by the IRS to be profit so I have to pay tax on it...)
It seems to me, you have said that most people do most their business at Christmas time. So that applies to you too right? Bite the bullet, and prepare for that, rather than buy all the product for the slow times.
You're talking about one order, not a couple months worth?
But I'm no businessman!
Again, probably contradicting myself, but I have found it's better to spend money in the slow periods than the busy periods, but the temptation is the opposite.
You get caught up in the summer or Christmas rush, and over-order, whereas sales would be just fine anyway if you hadn't ordered so much.
But if you over-react in the slow months by not ordering anything, you miss possible sales that are important.
On the other hand (Yes, I admit being wishy washy about this), during some slow periods -- like the first two weeks of each year, it doesn't matter what you order, it probably won't sell.
So...by that reasoning I shouldn't order now, OR in the next few weeks, either.
On the third hand, evergreen inventory has to be replaced at some point and.....
Oh, fuck it. I'm going to order.
hahah...
I can be pretty ambivalent myself at times.
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