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How does an "Open to Buy" work?

During many of Tom Shay's presentations, the question about an "Open to Buy" is frequently asked. Because this is a topic unto itself, we have added two areas of information to assist you in understanding, creating, and utilizing an "Open to Buy". The first is an article about an Open to Buy. You can see and print this article by clicking on this Open to Buy.

The second item we have added is an Open to Buy template which has been created using MicroSoft Excel. To fully utilize this FREE tool, you will need a spread sheet program (Excel, Lotus, or other similar program). The template you are going to download, does have example numbers to indicate how it works. Be sure to remove the example numbers before using the template. Click template to download the file. While we have created a unique business tool that we believe to be accurate, you should also utilize a calculator to verify the correctness of this information.

Click here, Open to buy, to see the PowerPoint, presentation notes, and free audio track for this important topic.

To complete the form, read this information and follow the instructions.

. The template has been write protected so that the formulas are not destroyed.

The fourth column has an E or P in it. This letter refers to that particular row of information. The E indicates you should enter information and the P indicates that row is protected. The first column has an E/P which means you need to enter the number for
the first month, but not for the following months.

The first information you should enter is the inventory on hand on the first day of business of the first month of your open to buy chart.

4. The next row of information you should complete is your anticipated sales for each of the months. This row is highlighted with light blue.

5. Your anticipated gross margin for each of the months should then be entered. This row is also highlighted with light blue.

6. The next row of information you will complete will be the "Desired Inventory - End of Month". Again you do this for each of the months.

7. A second reminder that you need to remove the amount of dollars listed as purchase orders. Each purchase order has a space where you can input your purchase order number and who the purchase order is written to. Then enter the amount of the purchase order in the appropriate row.

8. As you change your gross margin, and write purchase orders, you will find the bottom row (highlighted in orange) will change to reflect your open to buy. And as you change the anticipated sales to actual sales, you will find the open to buy to change to reflect the actual sales.

Enjoy this free tool to assist you in operating your business, and get your profits plus!

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