Financial Data
Updated 22 Feb 2020


Cupmasters founder says it pays to complete regular stocktakes

Stocktaking helped Anne-Marie le Roux find new ways to increase profits and improve her business.


Monique Verduyn, 30 June 2016  Share  0 comments  Print


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Anne-Marie le Roux launched a disposable cup business in 1999. She grew it slowly and steadily. Between 2010 and 2015, sales improved by 55%, and the business had achieved a growth rate of almost 20% per annum.

In conjunction with the improved sales the profit levels also increased. Along with her focus on attracting more clients and growing sales figures, Le Roux paid a lot of attention to admin and to managing overheads correctly, particularly when it came to inventory.

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KEY LEARNING 

With accurate, current knowledge about stock movements and stock on hand, you can make informed decisions about theft, slow-moving items, damaged stock, and more efficient warehouse management.


Having an accurate idea of the number of stock items your business owns allows your accountant to reconcile stock to the inventory, highlight discrepancies, and identify issues with stock management and control.

“Regular stocktakes enable you to discover where you’re going wrong and give you the opportunity to fix it,” she says. “They reveal the areas in your business that need to be improved to make it more profitable.”

Here are some of the key reasons why stocktaking is important: 

It helps you determine whether your business is meeting targets

Nothing puts your finances into the spotlight like a detailed stocktake. Major discrepancies in your numbers may indicate that you are not achieving financial goals set for the business. If that is case, you need to know about it sooner rather than later so that you can make the appropriate adjustments.

It enables you to analyse product performance

Cupmasters supplies a number of different types of disposable cups to the market. Without regular stocktaking, it would be difficult to keep track of which products are winners and which products are not as popular. A product that has been in the warehouse for months and is not moving should probably be discontinued. At the same time, you’ll be able to identify which products are selling well and order more of those.

Stock -taking

You can improve stock ordering

Regular stocktaking will highlight any shortages and oversupplies that you may not have been aware of, helping to enhance the ordering process.

It will help you to evaluate your pricing strategy

This is a great opportunity to analyse your sales and profits and potentially revise any pricing strategies that aren’t generating maximum profit.

It will expose theft and other reasons for stock shrinkage

Theft happens, unfortunately. While it’s difficult to control, there is some comfort to be had in that knowledge that stocktaking will uncover any major theft problems. It will also expose any Theft is not the only loss of stock you’ll see. A regular stocktake will also point out other issues, such as missing or misplaced orders, damaged stock, poor stock control, and warehousing problems.

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“Stocktaking, stock control measures and quality control are all very important and help to keep the business moving forward,” says Le Roux.

“In terms of cash flow management, it is critical to have a hands on approach to stock quantities. Slow moving stock has an impact on your profit margins. Offering a good remuneration package to staff helps to give the business a stable backbone, but that can only be done when you are able to maintain financial health. Regular stocktaking plays a key role in financial management.”


TRY THIS

  • Estimate demand for each stock item annually, quarterly and monthly. Take seasonal demand fluctuations into account, and stock up on seasonal items early.
  • Create a database of all stock items. For each stock item, include information on the item’s cost, suppliers, current stock level, lead time and inventory classification.
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About the author


Monique Verduyn


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