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Inventory needed per square foot calculator One of the tough questions a business always faces is that of how much inventory is needed. While the answer is found by answering the question of how much sales you want to produce, there actuall is a calculation you can make that will help you with determining the exact dollar amount. Begin this exercise by entering the width and length of the square footage the inventory is going to occupy. This could be a display area or the entire store. The height of the display is not a necessary component of this calculation. The total square footage will then appear in the third line of data. The next component of information needed is your desired sales per square foot. This is expressed as a dollar amount. The next row will give you a calculation of the amount of sales for the area you are calculating. The third section is where you enter your anticipated, or desired annual turn rate. Doing so will give you a dollar amount of inventory, at retail, needed for this space . When you enter your gross margin, the last row will calculate for you the amount of inventory at cost. This calculation helps so that you have enough inventory to produce the results you desire, but not have so much inventory that there are dollars sitting on the sales floor that are not productive. |
NOVEMBER 2024
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With over 25 years of frontline experience Tom Shay is America's leading Small Business Management Expert. He's a "Must Have" for your next event.
Small Business
Perhaps you have investments outside of your small business; gold, stocks, bonds or money market funds. With each you likely know what the rate of return is.
What about your busines? Do you know what the rate of return is for your business? You should. After all, you do not want to be the person who has just bought themselves a job.
Small Business
We see a lot of social media with what we think is a "sympathy plea" do do business with local small businesses.
It is not going to work. People select where they do business based on positive reasons. We discuss what we are seeing.
A timely article for the holiday season. With any business that has inventory, are you looking at sales per square foot? Are you looking to see which is the most valuable space in your business? You can increase sales by knowing which items to place where.
Fix This Next by Mike Michalowicz. We love this description of the book; The biggest problem entrepreneurs have is that they do not know what their biggest problem is.
If you find yourself trapped between stagnating sales, staff turnover, and unhappy customers, what do you fix first? Every issue seems urgent - but there is no way to address all of them at once. The results? A business that continues to go in endless circles putting out urgent fires and prioritizing the wrong things.
