5 Tips to Improve Year End Inventory (And Your Bottomline)
In the world of cannabis, nothing is more important to the success of your business than managing your two most valuable assets; cash and inventory. Inventory management isn't just an option in this industry, strict regulatory requirements make it an absolute requirement, but beyond just the laws, you could be losing tens of thousands throughout the year if you're not managing your products effectively.
Unlike other cannabis CPA firms, Cultivate offers specialized inventory consulting services. Our CEO, Andrew Gervais, has over 20 years of inventory management, point of sale system, and standard operating procedure experience to help our clients development and maintain critical operating systems for inventory success.
"Without the right operating procedures in place, I've seen businesses lose six figures plus in a year of inventory walking out the door and/or being miscounted." - Andrew Gervais, CEO
Five Tips for Having an Effective Year End Count
Prepare ahead of time - Conduct a dry run and schedule your team according to needs. In order to reduce the likelihood of miscounts, rushing your staff members, or running into other snares on count day, conduct some spot checking counts ahead of time. Getting an idea of what potential issues you may run into, like how to weigh and measure certain items, who will watch the retail floor and who will count, etc. can help make your actual count go smoother. Staff assigned to count inventory should be consistent as much as possible and trained in how to do the count. Their count order should also be consistent and we recommend always having two counters move through the enter inventory order together in order to help reduce the risk of theft.
Map it out - Count sheets should be maintained in order of your inventory on the floor/in storage. Meaning if you went left to right in the store front the inventory on the count sheet should match the exact items on display in the left to right order. Matching your count order to your display order can significantly help reduce the risk of miscounts or items being missed. Anything being counted in storage or the back of house should be counted the same way. Mapping it out as part of your dry run can also help you to prepare an orderly count sheet to make your real yearend count go quicker and easier.
Maximize your use of technology - Use scannable bar codes and pre-numbered inventory tags whenever possible. Most point of sale systems/inventory management software will offer electronic weighing machines, scannable bar codes and scanners that can all be used to help maximize efficiency and accuracy. The number one biggest cannabis inventory issue is missing and miscounted bulk flower. Taking the time to set up procedures to make sure all bulk flower is weighed and tagged as it comes in can help reduce theft and weighing issues as it's moved throughout the store and broken down into pre-jarred, pre-rolled and otherwise pre-packaged products for your customers. Losing a small amount of bulk flower each month may not seem like a lot but even a few thousand dollars a month can add up to a make it or break it profit margin for a business.
Schedule your count strategically - You don't want to be rushed! While the tips above can help improve efficiency, don't press yourself for time. Make sure to plan ahead to have staff count inventory while the business is closed for operations. Doing counts while sales are happening is a great way to make sure your count is wrong. The best time to do inventory is immediately after close on the last operating day of the year or first thing in the morning on the first operating day of the year before opening. Word of caution for morning counts though, it will always take you longer than you think so make sure to start early enough to be done before opening. We recommend scheduling additional staff to come help open the store who are not also responsible for counting.
Make sure you and your team all know your standard operating procedures inside and out. The best preventative maintenance is training. The more your team knows and understands that you take inventory management seriously, the less likely you are to experience theft or even miscounts. If you do not have well documented procedures we highly recommend putting some in place and that is your team's holy grail guide as to how they execute a count. Not sure where to start? Give us a call to set up an inventory consultation and we'll use our expertise to help develop a manual for you and your team.
"The worst thing you can do is nothing" says Andrew. "Even if you don't feel like your set up is perfect yet, doing a full year end count is critical to helping business owners start to understand where they need to focus their attention to help improve their bottomline going into the new year".
Looking for a consult? Call 207-800-3198 or visit our homepage to book a consultation with us. Note: space is limited for inventory consultations before 12/31.