Funding the Minimum Wage Increase
There’s a good chance that in January 2017 the minimum wage in California will increase to $13/ hour. That’s about a 5 % increase each year since 2008. As a small or medium sized business are you prepared to cover the cost of the increase?
I expect this will mostly affect retailers and restaurants. So, start preparing now and before you follow your instincts to raise prices or fire staff – take a look at your inventory process and system for your business. I have spoken to several small businesses who don’t spend much time managing their inventory. Why? It’s boring. I agree it’s boring but inventory takes up cash and the more efficient your inventory process is – the better off your businesses’ profitability. And profits are exciting!
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Take a look at dead inventory and slow-moving inventory. Why are you keeping these items? You might feel satisfied knowing you have, in stock, anything any of your customer wants. But as wage costs rise you can’t afford the luxury of inventory that doesn’t sell or is slow-moving. Remember, you maintain inventory because it’s an investment to increase your sales growth. If you start better managing your inventory you will be better prepared to deal with minimum wage increases and your business will be more efficient and increase its value.
Here are some links to small business inventory management systems. While systems and apps are great, keep in mind they are tools. Just like with a pen in my hand I can doodle a recognizable cat or dog – the same pen in the hand of an artist will visibly yield a much better and more valuable portrait of a cat or dog. You will have to have a plan in place and be diligent to maintain that plan.