If you are running a small business, then my guess is that you are in it to make a profit, no? The difference between the small businesses that succeed and the small businesses that fail, is that the ones that succeed have their business planned down to the very last detail. With so many other things to keep in mind when you’re starting your business, it’s easy to forget about the area of purchasing. It’s a given that you purchase goods and services, but are you purchasing them in a way that allows you to maximize your profit? Here are a few strategies you can apply in the real world to create a purchasing program that works for you.
A Few Things to Consider
Not all purchases are created equal, and your time spent on your purchases should reflect this. There are some purchases that require more attention than others, so it is important for you to understand that time needs to be managed in a way that allows your company to focus on its needs. Keep these four tips in mind to better manage your purchasing:
- Unit Cost: You should give more attention to costly items than you do to more expensive items.
- Extended Cost: While some items may appear to have a low cost, you may buy and sell them in high volumes. You may want to consider paying more attention to these items.
- Lead Time: You will need to take into consideration the time that it takes for products to get to you after you order them. Longer delivery times on less expensive items may make the items more pricy than they first appeared.
- Shipment Rejection: If there is a good chance that some items may be rejected due to technical difficulties, you may consider placing these higher on your priority list.
Select Someone to Handle Purchasing
When you’re running a small business, sometimes employees have to take on more than just one role. Since you’re already busy enough running the day to day operations, it will benefit you in the long run to delegate jobs among your employees or through an electronic invoicing system like ADP.com. The person you choose to manage your purchasing should be able to communicate with suppliers effectively to ensure that your company spending remains under control. While this doesn’t have to be this employees sole job, purchasing from suppliers requires more attention than just filling out order sheets.
These are just a few tips to creating a purchasing program for your small business that maximizes your profits. Paying attention to the small details is what is going to separate your small business from the ones that flame out.