With the prime candle selling season just ahead it’s imperative that you have the right amount of Candles of Eden candles and accessories in your retail store or spa. As well, you need to have an adequate supply of all your other quality product lines. When you ensure you have the right amount and types of inventory on hand, you start the busiest selling season of the year off on the right foot and can move ahead confidently with your marketing program. However, you want to make sure that having adequate inventory means not carrying a larger inventory than your sales warrant.

You do have to plan for increased sales. Your whole reason for being in business is to grow your sales – and your profit – consistently. Planning for increased sales because of the time of year and your marketing and promotion efforts does not mean operating inefficiently, though. Your ’stock-to-sales ratio” can give you an indication of how efficiently you are managing your inventory. Your stock to sales ratio is a measure of how well your level of inventory matches your actual sales. This relates to how many times you want to turn over stock in your establishment. If you want to turn your SoyLuscious® Soy Candles over each month then you would need to have just enough inventory to support that particular month’s sales. You would then need a fresh supply of our candles at your door at the end of the month in order to have soy candles ready for sale to start the next month. To turn your inventory over every month your stock-to-sales ratio would be 1 to 1.

If you don’t like to cut things that close, you may decide you want your stock-to-sales ratio to be four to one. That means each month you have four times the amount of inventory on hand as relates to your sales for that month. If you sell $750 of Candles of Eden products from your spa or store a month, you would want $3000 in stock each month. Turning over your inventory three or four times a year is reasonable for a retail business. You figure out your stock-to-sales ratio by taking your “Beginning of month inventory at selling price” and dividing it by your “Total sales for the month”. Hence, $3000 of inventory/$750 of monthly sales = four; you have 4 times the stock on hand.

You do not want the number much higher. When you see your stock to sales ratio creeping above five, to six, seven, and eight, or beyond then you know you are carrying way to much inventory and therefore hurting your available cash on hand for other uses. There is no benefit to your business in tying up too much of your money in inventory. By this, I mean in inventory that will not sell until six or seven months down the road. Yes, you want to have extra inventory to accommodate unexpected business and special orders and the like. However, three to four months of inventory on hand at maximum should ensure you never are caught short. If you always want fresh, quality products such as our SoyLuscious® Soy Candles and other lines in stock then you can adjust your inventory levels and get your stock to sales ratio down to the aforementioned one to one, or two or three to one. Four to one is a good ratio to shoot for because you do not spend money on shipping costs each month.

Remember you need cash flow to pay rent, heat, hydro, wages, repairs, taxes. You need cash flow for advertising, marketing, promotions, that staff Christmas party, and a host of other things. You cannot have all your money tied up in inventory that will not produce sales for you until sometime down the road. If you use reputable suppliers such as us here at Candles of Eden, you will always have access to the inventory you need when you need it. So yes, go ahead, stock up for the busy selling season on the horizon…just don’t overstock excessively.