Did you know that three of our 90+ Fishbowl employees run their own retail businesses on the side? All three run retail operations in very different markets and they all use Fishbowl Inventory to manage their inventory. So I thought I would take some time to interview each of these employees to provide a little detail, not just about how they use Fishbowl in their particular business, but the ins and outs of their businesses, the difficulties, the successes and maybe some of the mistakes they’ve made. Let’s start with:
Wasatch Office Supply: Adam Anderson
Purchase price of business: $18k
Additional cash required (mostly additional inventory): $15k
Adam has always been interested in running his own business and would like someday to own multiple retail outlets that together would provide him and his family a comfortable living. He purchased Wasatch Office Supply in Heber City, UT last November for $18k from a man who had owned and run the business for 15 years and was looking forward to retirement. The price included the inventory but Adam quickly realized he didn’t have enough product on hand so he had to purchase an additional $15k to avoid stockouts of needed items and to provide a wider selection.
Stockouts: Just to be clear, stockouts are when a store regularly carries a product but is currently sold out. In order to track stockouts, it’s necessary to first know exactly what you have on hand. But prior to Adam’s purchase of the store, inventory wasn’t tracked on a regular basis. In fact, the store manager kept a simple spreadsheet of all the items in the store and would occasionally do an inventory count to see what they were short on. No tracking of sales by day, month or year (just the occasional call to their supplier when they ran short on something) means that this 15-year-old business now has sales data going back exactly 6 months. But it’s a start, and now Adam can run a report on any item and see what its turnover ratio is, how many have sold (over any time period) and, most importantly, which items are actually making him money. (FYI: The above picture is NOT Watasch Office Supply. It is just a dramatic re-enactment of a SERIOUS stockout.)
Increased inventory and carrying costs: In retail, think of inventory carrying costs as an ongoing expense, so the initial thought as a store owner is to keep that expense to a minimum. BUT if your selection isn’t wide enough then people may come to your store, not find the specific items they’re looking for, and walk out. However, if you do have what the customer is looking for then odds are they’ll look around for other items they may need and make some additional purchases, which results in a bigger average sale. It’s a judgment call. In Adam’s case, he chose to purchase an additional $15k in inventory (almost the same amount he paid to purchase the company in the first place), but he’s managed to increase the average sale and is building up his clientele, as well.
Using the Groups function in Fishbowl: It’s tough developing a regular clientele, so Adam uses the Groups function in Fishbowl to track specific discounts for regular customers to encourage them to purchase all their Office Supplies from Adam’s store. Adam has worked out an ongoing discount with the Wasatch County offices and other organizations that regularly need office supplies. Whenever they come in for a purchase, they simply identify themselves as being from that group and Fishbowl automatically applies the appropriate discounts.
Cycle counts: In the past, no cycle counts were done, just the occasional check to see what they were short on. Now the store manager does a weekly cycle count to find out not only what they need to reorder, but what products are missing, as well.
Going forward, Adam plans to expand his business by using the Calendar function in Fishbowl for planning deliveries. This function allows him to schedule deliveries and identify the person(s) he wants products delivered to.
NEXT TIME: So how would you use Fishbowl Invetory to manage a massage business??? Next time we’ll be talking to Kendrick Hair, one of the founders of Solase Massage and Oxygen, to find out. Way cool.