Author: Emad Hanna

Inventory Concerns When Buying and Selling a Business

Inventory has the potential to be a point of contention when buying and selling a business. Taking inventory is an essential component of completing a transaction of this magnitude. However, there is the potential for the inventory count to prove divisive between the buyer and seller. If you sense there will be an argument about inventory counts or valuation, it might be best to rely on an outside party like an inventory management software to perform the inventory on your behalf. Otherwise, you run the risk of having the deal fall through simply because trust is lost over inventory count and/or quality.

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How Much is the Inventory Worth?

If you do not know how much your inventory is worth or whether your inventory valuation is accurate, it will be a point of conflict with prospective buyers. Sales agreements often specify dollar values for inventory as well as stationary property, intangible assets and equipment. The buyer might question whether the current inventory valuation is accurate. As noted above, the better course of action might be leaning on an unbiased, completely objective third-party to perform inventory counts and valuation to ensure accuracy.

Inventory Changes After the Count

Inventory is likely to change between the point at which it is counted and the actual sale date. If there is less inventory or more inventory than estimated, either the buyer or seller will feel as though an injustice has occurred. Adjust the closing price as necessary to reflect alterations in inventory and the deal will prove mutually beneficial.

Be Careful When Selecting an Inventory Counter

If you decide it is prudent to let an objective third-party inventory specialist perform the count, do not hire any old business for this important project. Ideally, the business buyer and seller will agree on an inventory specialist to perform the count. The inventory counter selected should be licensed by the state and have years of industry experience.  This company should have a database, the latest inventory counting technology and a track record of success.

What Happens if the Inventory is Higher Than Expected?

If it turns out the inventory is more than expected, the buyer can request for the inventory to be reduced. The other option is for the buyer to ask the seller to eat the cost of excess inventory. Plenty of sellers are willing to provide slightly more inventory than anticipated to grease the wheels of business and keep the deal moving along as planned. It is also possible for inventory to be high due to the inclusion of obsolete inventory. If inventory is no longer useful or egregiously slow to sell, the seller will be pressured to discount part of the current stocks.

Strive for a Mutually Beneficial Solution

Contention over inventory prior to the point of a business’s sale should not be a deal-breaker. The buyer and seller should be able to reach common ground without the deal falling apart. If each side is willing to budge a little bit on the issue of inventory counts and valuation, the sale can move forward, proving mutually beneficial to both sides.

 

About the Author:

Marla DiCarlo is an accomplished business consultant with more than 28 years of professional accounting experience. As co-owner and CEO of Raincatcher, she helps business owners learn how to sell a business so they can get paid the maximum value for their company.

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1000 times more powerful!

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Users who have been managing thousands of products using CyberStockroom probably noticed something huge over the past couple of weeks. Usually searching through a large number of products can be slow and sluggish. It’s often hard to find the exact products you’re looking for and very large inventories can slow down the software’s performance.

These are now problems of the past. Over the holidays, we rolled out an important update that allows our users to easily manage and search through MILLIONS of products without any performance decrease.

How did we manage to do this? It all has to do with the API that we will be releasing in the next few months. We built our API to be so fast and efficient that we decided to use it to run part of our website. The change in performance was dramatic and we decided to run most of the intensive inventory functions through the API as well.

Meet the Map!

Today I am proud to announce a tool that will be of tremendous help to small business owners everywhere:

1 min Explainer Video

For years, at CyberStockroom, we’ve known that inventory management is a pain in the neck. So much so that we’ve often given people who have to count inventory the chance to vent.

But since we can’t do away without inventory management, we’ve developed the next best thing! By creating a map of your business, CyberStockroom empowers you to manipulate your inventory products in ways that have never been possible before.

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You can now transfer products between locations just by dragging and dropping directly from the map. You can also see the products in any of the locations and navigate quickly from place to place.

The best part is that the map is fully customizable! Each business is unique and it’s up to you to build your map to reflect that.

I’m very excited to see the New CyberStockroom in action with our clients old and new and to hear your comments and suggestions about how we can continue to serve the small business community for years to come.

Emad Hanna
CEO, CyberStockroom

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Why Our Company Twitter Account is Full of Profanities

So it’s been over a month since we put our finger on the pulse of enraged inventory-counting employees all over the world.  Let me remind you what we did. We sell inventory software (cyberstockroom.com) and over time it became more and more clear to us that people really HATE to count inventory and generally avoid it like the plague. Well this naturally peaked our curiosity and we started working on solutions to make counting easier. But at the same time we wanted to have some fun with the sheer volume of anger and hate that we found online so we created a Twitter account (@InventoryRAGE) and we started to ReTweet as many angry inventory-counting Tweets as we could.

It turns out that there are WAY more tweets than we could handle and we didn’t really want to spend the entire day ReTweeting. So far, our incomplete list includes almost 1000 very angry tweets that we have often found to be witty, profane and sometimes very creative. Here are my personal top 5 favorites tweets:

So what are we to do with all this juicy hatered? Well, we had some ideas. First We created some word clouds which we shared with you on Part 1 of this post. We also created a collage of some of the tweets – I really think that every stockroom should put up one of these to cheer up the employees:

Inventory Sucks Poster for a Happier Work Environment.

After that we just wanted to keep going. We thought it would be a good idea to give these brave warriors a uniform so we made some t-shirts (Available Here)

Inventory Sucks - Classy Apparel
Inventory Sucks – Classy Apparel

But Something was still missing. Were we ready to tap this raw vein of vitriol and come out to the world and admit that these people were correct? That even though we are an inventory management company we agree that inventory does, in fact, really really suck? Yes. So we turned our marketing on its head. Our new Slogan is now “Inventory Sucks“. We’ve changed our homepage (our professional face to the business world) to reflect more accurately what we are about. Here it is:

Our New Homepage (cyberstockroom.com)
Our New Homepage (cyberstockroom.com)

How Inventory Management Can Make or Break a Small Business

Oftentimes, small business owners tend to focus on generating revenue, hard-to-please customers, personnel issues and raising financing. Unfortunately, many overlook one of the most important aspects of keeping a small business organized: inventory management. Your inventory strategy directly affects your business’ profit margin. When you have inventory that’s not being sold, your profit margin decreases, and vice versa. Using an inventory management system can help you keep track and adjust your strategies accordingly.

Why do I need Inventory Management?

 

Out of stock items lead to loss of sales and revenue

If an item is out of stock, you may not realize it if you’re not keeping track of your inventory with system that allows you to update your product information as you make sales. Waiting until after a purchase to notify a customer that his or her item of interest is out of stock is not a good business practice, and it often leads to unhappy customers who will be unwilling to return to your business in the future.

 

Overstocked items lead to wasted money

In order to run a successful business, one must learn how to order merchandise according to demand. If you are housing an excessive amount of a product that isn’t selling, you’re wasting storage space as well as money.

 

Identify issues before they become insurmountable

If it takes you months to recognize that there is a problem with your inventory, what may have been a small problem in the beginning has likely snowballed into a much larger issue. This means that your company may lose a substantial amount of money due to mistakes that may have been preventable if caught in a timely manner. For example, if one of your employees makes a mistake on a sales order, it is very important that you find out sooner rather than later.

 

Customer service

If you’ve been in business for very long, you’ve likely already received calls from customers complaining that they received the wrong product or the wrong amount of a certain product. It happens to the best of us, but if you are tracking your inventory, this mistake will be much simpler to fix. Accurate and timely communication with customers is of great importance in any successful business. Happy customers lead to increased sales, and increased sales lead to increased revenue.

 

Minimize theft

No matter how trustworthy you believe your employees to be, they will be much less likely to try anything sneaky when times get tough if they know that you are keeping a close watch on your merchandise. If you leave room for error, you leave room for theft.

 

When searching for an inventory management system that fits your business’ needs, be sure to pay close attention to the areas of most importance, which include: SKU recognition services, purchase orders, user friendly importing features, online POS services, visualization, customization abilities and website integration. Check out www.cyberstockroom.com to learn more about an inventory management system that includes these features and more!