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Start Up Inventory

Sandra Paluzzi
The Bead Peddler®

Last month we talked about your start up legal fees.  After you get set up legally, you will also need money for advertising and inventory. 

Your initial advertising fees can be minimal, but remember advertising does pay.  If you are just going to start selling jewelry to co-workers you can get by with a very basic business card you create on your printer. Add your packaging and you are set.   If you want to sell on ebay, they take care of your marketing and you will pay your ebay fees as you go along.  Again, I recommend professional packaging and a thank you note, business card or flyer with your ebay seller id to put in with the order.  Store fronts can usually get one free press release in a local newspaper but will probably want to augment that with paid advertising.  We have discussed various types of low cost / no cost marketing tips in other marketing articles. 

That brings us to inventory.  I would recommend putting at least 1/3 up to 1/2 of your startup inventory money aside to use to replenish inventory once you make your first few sales.  Now you have your starting inventory budget.  Next you have to gauge that budget against what you want to do.  If you want to sell jewelry at home shows, you can start by selling at work to see what goes.  You could bring in a dozen pieces to start with.  Restock inventory, bring in a dozen more and build your way to the hundreds of dollars worth of inventory for a home show.  Opening a store, of course, requires a great deal of inventory.  I have about 5000 (my cost) in my flea market booth and there's room for a lot more. However, I started with an initial inventory investment of 300.00 and worked my way up to a website, then expanded into a retail location. 

There are certain factors to take into consideration when deciding what to buy and where to buy it:
1) How long does it take to get the item back in stock?  If you can get an item delivered in a week you need much less stock than if it takes 3 months to restock. 
2) How much do you think you will sell?  Again, starting small cuts down mistakes as you grow.
The real question is the forecasting of sales.  Over and over again, I have brought in a new line thinking bead A would fly out the door.  Bead A has sat there while Bead B, which I completely underrated, has blown off the site.  But here again, you can hedge your bets. 

If you are making jewelry, you know you will go through a lot of clasps, earwires, eyepins, threads, etc.  These are the items you should consider buying in bulk to save money on your designs.  If you are selling jewelry outside your college football stadium, by all means stock up on the team's colors.  If you're doing a show for red hat society members, stock up on red and purple.  If you're selling to the general public, look around and see what colors people in your community are wearing.  Buy into these trends.  Make sure each design contains some beads or elements to set it apart from Walmart's jewelry.  At first, I recommend buying small quantities of a selection of beads.  You will pay more per bead but you will be risking less.  Buy into your trends, but do not buy exclusively into your trends.  Remember, trends come and go.  With few exceptions, beads that fly off the site this year will move more slowly next year.  And your repeat customers will want a fresh new look as they return to you.  Bottom line is you will make an inventory mistake at some point in your business.  Be in business long enough and you will make many buying mistakes.  You will not have what everyone is screaming for and you will be flush with beads you can't give away.  It happens, it's the reason I started my blow page.  If you have inventory money in reserve, you can react more quickly to the current market by getting in the new 'hot' bead of the moment.  If you have hedged your bets as you bought your initial inventory, you will not be stuck with a lot of 'last year's beads'.  And if your designs are truly classic, they will sell well anyway.  If you design with everything to be the lastest style, simply charge a little more for the availability of the latest trend and blow out what you have left. 

A parting word on start ups.  You are always in a start up mode of some type.  Get one line of beads firmly off the ground and you are either expanding your bead lines or your marketing.  Get down doing home shows and the number of shows you give will grow exponentially taking up all of your time and having you bring on 'exhibitors'.  Businesses always evolve, the uncertainty is always there.  You are always taking the same risks, you just develop confidence in your ability to face the challenges and to ride out your mistakes.  To me, that is the measure of success. 

Next month we will talk about competing with the dreaded 'Chinese' (aka low cost, low quality goods) and then we will get into hitting 'sweet spots', that magic number at which an item still flies out the door at the highest possible price. 

In the meantime, I would like to take a survey.  Please go to our bulletin board and post to a thread talking about how much you make per hour beading versus what you would like to make per hour.  Click here to visit our forum

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