The Less Inventory, the Better!

The less inventory the better in a small business! Recently, I had a client that was in a business that he could order the raw materials today and receive it tomorrow morning for an order that he did not have to shop for two weeks and only took 4 days to manufacture. The bottomline was that he really needed zero inventory on hand or very little. This was a company with less than two million in annual sales which was less than two thousand dollars in average monthly sales. He had over $650,000 in inventory. In a small business, as far as I am concerned, inventory is a bad thing. It can get damaged, stolen, lost, etc. The less inventory on hand the better. The less the inventory, the more cash in the bank. The less inventory on hand the less property insurance needed to pay for. There are many, many good reasons to reduce the inventory and have all that cash in your company checking account! The lower the inventory on hand, the higher the company profits!