Improving fiscal year by closing out product the last month
Without a doubt it happens every year; businesses start closing out product to improves their end of year quotas.This can be a great way for businesses to get rid of excess product they have not sold while allowing its customers to benefit from wholesale and discount prices.
What do I need to close out the year?
The following is a list of things you will need to do or consider as you improve your fiscal year by closing out product:
- General Ledger- you can find a complete set of instructions for General Ledge Purge.This will help you avoid unnecessary problems.You can add your budget figures before or after the purge; they will not be affected.
- Payroll- you are not required to purge your payroll record, however you should update several controls before starting a new year.
- Payroll EIC Tax Table
- Payroll control record for the new year
- Financial Records
How do I know what products to close out and prices?
Like every business, there is a basic science to establishing prices for wholesale and closeout products.The formula used the most is usually based on factoring in fixed and variable costs; then you will add in the mark ups.Of course this may need to be modified a bit, depending on your business.It is not just a "one size fits all" kind of think.Your business needs may be very different from another business.
You must consider the reason or reasons why your wholesale and closeout customer is purchasing your product.This will help you determine how much and what to closeout.Most closeout customers are purchasing product so they can buy it cheap; resell it, and hopefully make a profit off of it.You want to choose and price wisely as you want their returning business.A customer will consider returning to its supplier if the profit margin is high enough to cover their costs, and leave them with a significant profit.So as you are considering what to sell and for how much, take into great consideration your customer clientele.What do they need?What have they paid previously for your products?How much of a discount would make a difference to them?As you establish and keep relationships between you and the customer, you can improve your fiscal year by profiting on year end closeouts.
Different ways you can closeout products.
Just like a retailer who at the end of the year needs to make room for incoming product, businesses and manufacturers have to get rid of their excess to bring in the new stuff.
You can closeout product three different ways:
1. Selling to company-owned outlet stores
2. Offer leftover product at a discount to specialty stores and big box chains
3. Selling product to closeout stores
Selling to company-owned outlet stores
If you are lucky enough to find one of these companies the advantage to this is you can control the product and price point at which you sell.But there are only a handful of businesses that are big enough to have their own company-owned outlet stores.
Offering leftover product to specialty stores
Almost everyone will agree that this is the favorite way to distribute closeout product.Brands can still keep their markup on products, and specialty accounts receive discounts.Specialty stores also like to have the new and up to date product.If you just need to make room for more stuff, this is a great way to distribute your new products you may have too much of.
Selling product to closeout stores
This is always a good option if you have closeout product that is not new.You can usually sell your product to closeout stores such as TJ Maxx, Ross and many others.The one disadvantage to selling your closeout products to other closeout stores is that you may not get the price you want as they sell closeout products at a lower price also.
Customers are always looking for the best deal, especially at the end of the year; companies are always getting rid of excess and wanting to improve the fiscal year by closing out product the last month so why not make everyone happy.Be sure you remember your customers as you consider what to closeout; how much to sell it for; and when to do it.Timing can play a critical role in determining whether or not you meet your sales quotas.