Before purchasing inventory

When starting or running your business, there are a few things to consider before placing your first inventory order. We've covered a few below to help you get started in buying and managing your inventory.

Inventory type

1. What type of inventory will you sell?

2. Will you be buying finished products, or making them yourself?

3. Are your goods perishable or seasonal?

Rules and regulations

1. Do you require any permits or licences to buy, use or sell your inventory or finished goods?

2. Are there any laws or regulations around the products you are selling?

I3. f you're buying from overseas, can the goods be imported into Australia? Is it listed as a prohibited or restricted good?

Suppliers

1. Have you found suppliers that can regularly and reliably provide you with inventory?

2. Are there likely to be any delays in receiving the inventory?

3. Have you negotiated the terms and conditions with your suppliers? Is this in a written agreement?

4. Have you considered the shipping time and costs associated with each order?

Finances

1. Do you have the finances to cover your inventory purchases?

2. How will you manage the finances ongoing to cover your inventory costs?

3. Will you be buying inventory on credit? What are the payment terms?

4. Have you considered the interest and other costs when purchasing inventory?

5. Do you know how to calculate your inventory costs to help you manage your cashflow?

6. Do you know how to calculate your inventory turnover?

Inventory systems and records

1. Do you have inventory systems in place to record and keep track of your inventory?

2. Will you need to do a stocktake and if so, how often?

3. Have you got your payments and invoicing systems in place?

Warehousing and distribution

1. Where will you store your inventory?

2. How much can you physically store?

3. What are your storage costs?

4. How will you distribute your inventory?

5. Will you be able to track your products when distributing them to your customers?

Insurance

1. Have you considered insurance to cover the inventory you keep on-hand?

2. Does you know what your insurance policy covers (e.g. theft, damages, fire, flood)?

Security

1. Do you have security procedures in place to protect your inventory?

2. Have you trained your employees in stock handling and security procedures?