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Tuesday, June 30, 2015

Quarterly Inventory: The Reckoning Day

A wiser man than myself once said, "In business, you don't have what you can't count."  I have found this to be extremely true.  A business may accrue some benefit from intangibles such as goodwill, but until you've captured the value of goodwill by an arrival and transaction, you don't actually have anything.  As the saying goes, landlords are rather particular about being paid rent in the form of money dollars.  They still won't accept goodwill as currency no matter how much I implore them to do so.

So, here at the DSGCW, we count virtually everything, and we count it regularly.  We have to.  It's the only way to know what we have.  There are also those pesky tax laws that insist that we keep quasi-regular counts of everything the business possesses.  I suspect most game or comic stores would utterly crater in the face of an audit, and valuation of inventory is one crucial reason why.  Everyone counts the money; not everyone counts the things.

Roughly every month it's necessary to count certain inventory categories because otherwise the stock numbers become unwieldy.  Errors due to prize payouts, frequency of turnover, and shrinkage become too evident.  Trading card game booster packs, sleeves and accessories, and such items make up the bulk of what we count monthly.  There are always corrections.  One of the things I hope to see with our migration later this year to Microsoft RMS ComicSuite is for tournaments to deduct product used automatically through their "tag-along sale" feature.  Right now if we conduct a booster draft, we have to go back afterward and remove 16 Dragons of Tarkir and 8 Fate Reforged boosters from inventory, under an add operation (for negative quantity) dated and tagged with the sanctioned event info.  That's a needless step and it gets missed when we're busy and it's late.  Customers and sales come first, after all.  But in any case, every month that inventory needs to be re-counted.

Periodically throughout the year, usually when there are enough errors that it's bothering me -- a very technical metric, I know -- I will have the staff count up another category and make corrections.  I had our Comic & Media Specialist do a fresh count of the trade paperbacks mid-cycle and he found many errors and also found some things on our re-order reports that were being generated by mistake due to Diamond changing out a barcode or product code.  Another problem ComicSuite RMS will allow us to bypass.  At the end of that quarter, I didn't have the staff re-count the trade paperbacks.  They were still fairly freshly curated.  The cost of labor to re-do it was unlikely to pay off in the form of the value of errors fixed.

This time, however, it wasn't just quarterly inventory, but semi-annual.  Halfway through the year, and it has been at least two months since anything but boosters and sleeves got a count.  Everything in the store gets a reconciliation at this point.  We'll do it again just before the end of the year.

Once upon a time, we could do inventory during open hours in the course of a quiet couple of mornings, and not have so many sales in the meantime that the count is too far off to correct on the spot as I enter results.  Not anymore.  We're too busy, we have too much stuff, and we make sales constantly, all the time, every day.  So for the first time ever, this inventory session started at 8:00am on Sunday morning.  Three owners and some staff volunteers, and a lot of coffee and donuts.

How did it go?  Better.  We didn't quite get everything knocked out as quickly as I hoped, and bled into the day's business -- Sunday's hours are noon to five -- but overall I think this is as solid an inventory count as we've had since the beginning here at DSG.  Our books will close for the month and quarter and will be about as rock-solid as we can make them, permitting us some authentic profit-and-loss metrics and figures that we can use to forecast the next half-year's worth of finances and operations.

If you're running a business and you haven't counted everything up lately... maybe it would be a good idea to set some time aside to do so.  You never know what you might be able to do with all the stuff you'll probably discover that you didn't realize you had!

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