How to Survive the Post-Holiday Ecommerce Slump

Posted on by Amanda Levine

As the holidays come and go, business owners search for holiday selling eCommerce tips. In most cases, your sales will increase around the holiday season. When the holidays are over most businesses suffer from a post-holiday sales slump. If you have been in businesses a few years now, you may be starting to grasp a better understanding of how the holidays impact your sales. Whether you are new to business or established, eCommerce holiday planning and readiness is important. Keep reading to learn valuable holiday selling eCommerce tips such as how to survive the post-holiday sales slump.

Tips to Prepare for the Post-holiday Slump in Sales

As a small business owner, you do everything you can to prepare for that critical shopping season that falls between Thanksgiving and Christmas. You ensure your inventory is at sufficient levels, you possibly take on new staff to meet volume expectations, you coordinate with your logistical partners, and then you brace yourself for long hours to ensure every customer is satisfied with their purchase experience. When the holiday shopping season hits, you are in it deep, and before you know it, the last order hits the delivery truck. So, what’s next? Sure you may have a week or two of dealing with returns and exchanges, but overall sales, for any business, typically takes a dramatic dip during the weeks and months after the holiday.  So it’s  important for any business to prepare for this post-holiday slump in sales. 

Here Are Some Tips That May Help You Prepare for the Dreaded Post-holiday Slump:

  1. Explore marketing automation: Marketing automation helps you keep track of customers and market to their personal interests based on past spending habits. By making product suggestions based on a customer’s psychological needs and wants, the chances of making a follow-up sale can increase. 
  2. Impulse purchase tactics: As much as people hate to admit it, many of us make impulse purchases frequently or semi-frequently. By playing on those impulses, businesses can potentially increase their sales by engaging customers they may not have thought to market to previously. By utilizing mobile technology and social media, and by using attractive design principles to attract customers’ attention, you can maybe take advantage of some of these impulse buying behaviors that many of us have. Other tactics include offering free shipping, using suggestive selling at the point of sale, and creating time-limited promotions. 
  3. Mobile access is key: More and more consumers are making purchases using their mobile devices. As apps and websites have become more accessible to mobile users by making purchases as simple as possible, people have responded openly with their wallets. Make sure your site is no different. 
  4. Create a separate “after the holidays sale”: After holidays clearance sales, inventory clear-out sales, buy one get one free sales, etc. are sometimes attractive to consumers if the sale is enticing enough. 
  5. Launch a new product: Some businesses may not think that after the holidays is a good time to launch a new product since sales, in general, are much lower, however, if your product is enticing enough, you may enjoy launching your product during a time when other businesses are quiet. Competition may be much more scarce, and ad channels much quieter, making your product stand out. 

These five tips may not bring the same results that you had seen during the holiday shopping season, but if properly utilized, they may help to give your business some continued business in the weeks and months following the New Year. 

How to Plan For the Post-holiday Decline in Volume

Just as you will want to prepare for the post-holiday slump by using some of the tactics we previously discussed, you may also want to do some more big-picture planning for the post-holiday decline in volume. As the previous tactics were more about how to directly increase your sales during the slump, the following are ideas for planning for the decline in overall volume.

  • Keep your marketing efforts strong: It is easy for businesses to make the mistake of slowing down marketing efforts during the first quarter of the new year. But there are still plenty of marketing tactics you can deploy to keep your customers engaged and attract new ones. Additionally, you may have just collected an immense amount of customer data from all of the sales you just made. This is an excellent opportunity to begin to study the sales and consumer data to create some amazing follow-up marketing material. Maybe you want to create an email blast giving tips about how to get the full experience from one of your best sold items? You could send this email out to every customer that had just bought this item coupled with some suggested items that would best accompany the original product. Or, maybe you want to see which items were the most abandoned in the cart at the time of sale? You could then create a social media advertising that offers steep discounts on that particular item hoping to attract those potential customers who may regret never finalizing the initial purchase. Not only are these some tactics you may want to consider for future marketing campaigns though the entire new shopping year, they have the added benefit of boosting sales during the post-holiday slump. 
  • Plan for the next season: After the holiday shopping season has ended, ideally you will have more time to plan for the next one. There are still some shopping events that fall early in the calendar year. The Super Bowl and Valentine’s day are still major events that happen early in the first quarter. This little bit of down time that you hopefully can enjoy may be a good time to plan a sale or offer that caters specifically to the next big event.

In addition to using the post-holiday decline in volume for big picture planning considering next year’s sales, promotions, and marketing efforts, you may want to take some time to address some more of the nuts and bolts of your business. Did everything operate smoothly during the holiday shopping sale? Were you adequately staffed? Were there any technical issues that arose that need to be addressed immediately? What about inventory? Did you have sufficient stock of your most popular products? Inventory management is a large part of a business’s success. 

Tips to Manage Your Holiday Inventory Requirements

When your business is experiencing that quiet time that typically occurs directly after the holidays, it is a good time to assess your inventory management skills in preparation for the recent holiday season. Here are some basics you should look at when making that assessment. 

Forecasted holiday sales: Did you make a proper forecast for how much inventory you expected to sell for each particular item? What information do you use to come to these estimates? How accurate were they? This is a good time to fine tune your inventory management processes to make sure you can accurately prepare for the next holiday season. 

Did you order your inventory early enough: How was shipping and receiving in anticipation to the previous holiday shopping sale? Did everything arrive in time to be properly received and stocked before orders started coming in? Maybe you missed on some steeper discounts from vendors because you ordered too late? If you can afford to sit on inventory for longer periods of time, it may be a good time to discuss steeper discounts with your vendors for stocking up on certain products earlier in the year when they too are experiencing a general slow down. 

Have reliable logistics in place:  The last thing you may want to consider is setting up a meeting with your shipping companies during this time. Have some frank conversations about your expectations if you had any issues during the holiday season. Were deliveries late? Do you need to think about adding extra pick-up times throughout the day to make sure all your orders get out the same day they are processed? Shipping companies, just like any other company, are running past capacity during the holiday season. They do the best they can, but they still should hear about any issues you may have had. They will appreciate the feedback and the opportunity to do better rather than losing your partnership. 

The time after the holiday season is not only a time to try to pick up additional sales or to plan for the next year’s marketing strategy, it is a time to address general operations and inventory management in anticipation of next year’s holiday shopping season. 

How Kickfurther Can Help

Managing cash flow and keeping inventory in stock can be an ongoing battle. During the holiday season it can be especially difficult. While you need to ramp up inventory prior to the holiday season, you may encounter an unavoidable sales slump after the holidays are over. This can make it especially tough to manage cash flow. Most businesses need to use inventory financing. Small businesses and eCommerce businesses may struggle to find affordable inventory financing. At Kickfurther, eCommerce businesses can discover inventory financing that is up to 30% cheaper than other options. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

Prepare for the holiday season. . discover affordable inventory financing today!

Reseller Tips for Sourcing Inventory Online

Posted on by Amanda Levine

Starting a reselling business is a great way to make money on the side. You can even do it in the comfort of your own home. Reselling items online is one of the easiest businesses to manage and it could even be an excellent option for those starting their entrepreneurial careers. But what if you don’t live in close proximity to mom-and-pop stores or thrift shops? Thankfully, there’s online product sourcing.

Online sourcing is a business process of finding, evaluating, and purchasing products online. This type of sourcing method allows you to access a broader range of suppliers and assess various products that you are planning to sell. But before we talk about sourcing inventory online, let’s go back to basics. What exactly does sourcing mean?

What does sourcing mean?

In business, sourcing refers to the process by which a company procures the products that it plans to sell. Regardless of the type of business that you have, product sourcing is an important aspect of your operations as it lets you identify potential suppliers that would provide you with the best bang for your buck. These days, however, more and more business models are relying on sourcing their products through the Internet.

What is the purpose of sourcing inventory online?

As the business landscape becomes increasingly reliant on technology, companies are recognizing the potential benefits of sourcing inventory online. The same goes for independent entrepreneurs like resellers. Factors such as time and procurement costs play a significant role in a reseller’s decision to use online inventory for their sourcing needs. Let’s take a look at some of the pros and cons of sourcing inventory online.

What are the benefits of sourcing inventory online?

  • Reduced costs – Sourcing inventory online eliminates costly paperwork, in-person site visits, and errors that happen frequently during traditional sourcing methods.
  • Increased productivity – In online sourcing, resellers can essentially sift through hundreds of items without having to physically visit brick-and-mortar stores. Having your payment records stored electronically also makes it faster and easier for you to pay for the products that you are planning to resell.
  • Improved transparency – With online sourcing, resellers can enjoy improved transparency when it comes to data acquisition and budget management. Since almost all information is centralized, resellers can make informed decisions and ensure that procurement procedures are aligned with their policies.
  • Access to technology – Resellers can make use of procurement software that can help automate the entire sourcing process. This mitigates the risks associated with sourcing and streamlines inventory control measures to keep your bestsellers always in stock.

Are there any drawbacks to sourcing inventory online?

  • Due diligence can be difficult – Since all transactions are made online, it can be difficult to scrutinize the quality of the products that you are purchasing.
  • Susceptible to shipping problems and delays – Even the most successful resellers experience shipping problems and delays every now and then. There will be circumstances where items are lost or damaged which could affect customer satisfaction.

What are the different online sourcing options?

Resellers can choose from a wide range of sourcing methods that can cater to their overall business goals. It is of utmost importance to take a step back and spend considerable time when choosing a sourcing strategy to make sure that you are implementing the right approach. If you’re considering sourcing your inventory online, here are some of the most common sourcing options to help you get started.

  • Online arbitrage – Similar to retail arbitrage, online arbitrage is a sourcing method that involves buying discounted products from an online marketplace and selling them for more money elsewhere. The key to online arbitrage is to use various tools to be able to find the right products that can be sold at a profit. For resellers, it’ll also pay to visit multiple online platforms like Amazon and eBay to make sure that you are getting the best prices possible.
  • Dropshipping – Dropshipping is a fulfillment method that enables businesses to open an online storefront and address customer demand by passing sales orders to a third-party supplier. The supplier then takes care of the logistics involved in shipping the product to the customer. This eliminates the need for storage facilities which would incur overhead costs.
  • Wholesale – When resellers buy wholesale, they take advantage of bulk discounts to be able to purchase a large number of goods at a lower price point. Resellers that use this type of sourcing strategy purchase products from a wholesaler and sell their goods at retail prices to turn a profit.

Tips for successful online sourcing for resellers

There’s no way around it – reselling is one of the most affordable business ventures that you can start in your spare time. However, that doesn’t mean it’s easy. In this section, we’ll provide you with some tips on how to successfully source your products online. Check them out below!

  • Do your research
    • In any kind of business undertaking, research will be critical to your future success. As a reseller, it is necessary for you to conduct market research as you look into potential products to resell. Market research will help you determine if there is enough demand for a specific product and provide an overview of your potential target market. s
  • Pay attention to the quality of products
    • As a business owner, one of the most important things to do is to ensure that your products are of good quality. Sometimes, it can’t be helped that discounted products contain design flaws that justify their low price. Make sure to pay attention to the quality of the products that you are about to flip before you list them on your online storefront.
  • Shop around and look for reasonable prices
    • Shopping around enables resellers to look for more reasonable prices when sourcing their products. While shopping around may seem tedious and overwhelming, it allows you to learn more about the products that you are trying to procure and gives you a better idea about how these items are priced in the market.
  • Look for products that are easy to source
    • Sourcing inventory, as a reseller, can be a complicated task. This is why it makes sense to look for products that are straightforward to source. Consider factors such as cost, supply chain stability, as well as logistics when sourcing your inventory. Make sure to employ a sourcing method that’s flexible enough to support your business as you scale and grow.

Conclusion

When it comes to reselling, online sourcing can be a great way to save on the plethora of costs associated with procurement. But before deciding to become a reseller, it’s important to conduct your due diligence and get a feel of the current market to determine the best products to resell. If we could leave you with one piece of advice, it’s this: take it slow. It’s easy to get caught up in the reselling business especially if you experience success early on. Always remember to take only what you can handle and put emphasis on satisfying your customers first before anything else.

About Kickfurther

Kickfurther matches your business to a community of eager buyers that help fund your inventory on consignment. It is the world’s first online inventory financing platform that enables companies to access funds that they are otherwise unable to acquire through traditional sources. With Kickfurther, businesses have an alternative financing option that alleviates the cash flow pinch that traditional lenders can cause. This creative and innovative financing option allows your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility. Continue reading “Reseller Tips for Sourcing Inventory Online”

Benefits of Advertising on TikTok for eCommerce Sellers

Posted on by Amanda Levine

TikTok advertising allows companies to reach more potential customers through a unique approach. As a fellow TikTok user, I can say first-hand that I have discovered some of my favorite products on the app. Most of them, I was not even looking for. TikTok allows companies to advertise and reach potential customers in a fun and friendly way. So what are TikTok advertising costs? Just how much does it cost to advertise on TikTok? Keep reading to learn more about TikTok advertising.

What is TikTok?

In the most basic terms, TikTok is a video-sharing app. The app allows users to create their own 15-second videos on almost any topic and post them and share them with other users on TikTok, as well as with users on other social media platforms like Facebook, Instagram, and Twitter. TikTok users are also allowed to download their own TikTok videos, or videos from other users, onto their personal devices and share them however they want using email, SMS, other messaging apps,  etc.

In recent years, TikTok has soared to immense popularity, being one of the most widely used and downloaded apps for both Android and Apple devices. By October of 2020, TikTok had grown to over 732 million active monthly users globally. They are projected to reach more than 1.2-billion users in 2021. 

Why has TikTok become so popular? One of the reasons TikTok has become so popular is because they were able to take video content creation and editing and make it easy and accessible to the everyday user. No need for expensive video editing software or high-powered machines to work on video projects. The 15-second videos can be made effortlessly, quickly, and they can easily be shared with anyone in the world in a matter of seconds. 

TikTok is also popular because of the localized content it can contain. Although TikTok is a global app, the ability to create local contests and encourage local user participation by the use of geo-specific hashtags has allowed users to create smaller digital communities within the larger global community that is TikTok. Couple localized content with country-specific celebrity use and endorsement and people are genuinely entertained and engaged in the application at all times.

With the popularity and widespread use of TikTok not seeming to go anywhere anytime soon, it is natural that many businesses are trying to figure out a way to advertise and market their products and services within the TikTok platform. 

Is TikTok a good social platform for eCommerce sellers?

TikTok has been identified as an excellent platform for many eCommerce sellers to get information out about their brand and their products into the public sphere. However, you must know your audience and demographic. TikTok advertising is best used by brands and products that have identified teenagers and young adults as their target market. For the most part, the TikTok community mainly consists of younger users.

Can you advertise products on TikTok?

Yes, you can advertise almost any product that you would like on TikTok. You can pay to have in-feed video ads displayed to end-users, or you can get creative with brand hash-tag challenges, contests, and brand takeovers. Within these main categories, you are only limited by your imagination. 

What type of products can you advertise on TikTok?

Essentially, a business could advertise for almost any product they wanted to on the TikTok platform. The main catch is that, again, you need to know your target market and the main demographic of the TikTok community. For example, you may not want to advertise on TikTok for a product that is designed for people who are 65-years of age or older since the largest portion of the TikTok community is most likely under the age of 30-years old. 

How do brands advertise on TikTok?

Currently, TikTok does not allow traditional ad displays, like banners for example, to appear within the application, and when comparing the platform interface to other social media platforms like Facebook and Instagram, it may be extremely difficult for TikTok to compete in this realm of digital advertising. That is why TikTok has become more of a platform for companies to market their brand image to users through the creation of brand-related content and the use of celebrity or “influencer” endorsements. 

Creating brand-related content could come in the form of a company creating their own content that they then pay TikTok to play intermittently through individual’s content feeds. or it could be  a contest or a challenge where users submit their own videos containing a product from the brand. By using a special hash-tag, all the videos uploaded that are related to that particular contest can be easily viewed. 

For example, if a new soft drink came out onto the market and they wanted to promote their brand through a TikTok contest, then maybe they could ask users to upload their most entertaining videos of themselves chugging the beverage with the hash-tag #BobSodaChugChallenge. All videos related to the contest could be easily viewed by the hash-tag,  and then maybe some prize money would be awarded for the top-3 most liked and shared videos with that hash-tag on TikTok. The prize money creates an incentive for people to create brand-related content on your behalf, and the contest itself creates a buzz around the brand and/or new product being launched. 

The use of celebrity or influencer endorsements to promote a brand is pretty straightforward. Companies can pay a celebrity or an influencer with a large following on the TikTok platform to create content showcasing their appreciation for the brand, or content of them simply using a product or service associated with the brand. 

What is the cost to advertise on TikTok?

If you are looking for the more traditional route for advertising on the TikTok platform, which includes creating a brand-related TikTok video and paying to have it played to individual users when they are viewing their feed, it can get quite expensive fast depending on the size and scope of your campaign. The most recent figures state that at the lowest tier, TikTok advertising starts at about $10 per 1,000 views. To begin any new campaign, TikTok requires a minimum ad buy of $500. 

Tips on using TikTok for eCommerce

The main things to remember for using TikTok for eCommerce include knowing that 63% of TikTok users in the US are between the ages of 10 and 29-years old. Also, the percentage of users decreases exponentially as age increases. If your product is designed for this age group, then TikTok may be an excellent platform for you to explore. If not, then not so much. 

Other tips include creating engaging content and following local, region, and national trends to see how you can maximize the effectiveness of your content and reach a wider audience. 

How Kickfurther can help eCommerce Sellers

Kickfurther is the world’s first online inventory financing platform that enables companies to access funds that they are unable to acquire through traditional sources. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

R&D TAX CREDITS: America’s Best Incentive Program for SMB’s and Startups

Posted on by Amanda Levine

There are many variables to building a successful startup, and at times it might seem impossible to come out ahead without drastically increasing or decreasing expenses. Founders must do their best to leverage and test strategies to increase their bottom-line in an effort to maintain headcount, morale, and revenue all while remaining capital efficient.

Taxes are likely the last thing founders consider as a viable financial savings strategy, and familiarizing yourself with government incentive programs is even less likely to cross your mind.

But you’re not alone. It’s estimated that more than 80% of startups and SMBs are either completely unaware they’re eligible for government sponsored tax credits or don’t have an easy way to get them. But the fact is, these credits can save your company thousands of dollars every year. And it’s not just for big corporations.

What are R&D Tax Credits?

Regardless of a company’s size, success happens when minds are focused on change. Some of the world’s best innovations came at the 11th hour when it seemed like a breakthrough was impossible.

These breakthroughs can change the world, but in most cases, those “aha” moments didn’t happen over a long weekend. Instead, it took years of endless tweaking and testing, otherwise known as Research & Development.

In addition to the current stimulus programs, the Research & Development Tax Credit

has actually been a long-standing government funded program finally made permanent as part of the Protecting Americans Against Tax Hikes (PATH) Act of 2015. This specifically opened up enhanced benefits for Startups.

From it’s origination in 1981, the R&D Tax Credit has helped companies remain competitive in the marketplace by allowing a dollar-for-dollar reduction of federal and state income taxes owed for qualified expenditures incident to the development or improvement of a product, process, formula,invention, software or technology.  The definition was made intentionally broad to allow for dozens of innovative industries to leverage it.

The PATH Act created important opportunities for taxpayers claiming the federal research credit. A permanent credit means that all businesses can engage in meaningful long-term planning for tax benefits. The expansion of the research credit to offset payroll tax liabilities means that many small businesses will now share in these benefits.

Unknown to most startups however, they’re eligible to receive these credits for their annual investments in the innovative work they perform every year, regardless of whether their product is in the marketplace or yielding revenue. Basically, this is the government’s way of rewarding companies for investing in innovation and continuing to build cool stuff!

Do you qualify?

The R&D credit isn’t just for companies that are heavy researchers. It’s best to think of innovative activities at a higher level as the program is quite robust. Startups that can claim the credit come from a variety of industries. Some of these industries include but are not limited to:

  • Big data
  • AI
  • CPG
  • Crypto
  • Agriculture
  • Software/Saas
  • Manufacturing
  • Oil & gas
  • Aerospace
  • Virtual Reality
  • Textiles
  • Pharmaceutical

Additionally, a good rule of thumb is to ask yourself the following questions:]

  • Do I make something?

At the most basic level, if you’re developing or improving upon technology or products, odds are you probably are entitled to some money back from the IRS!

  • Does my product change over time?

Businesses rarely make their products the exact same way, year after year. So if your company invests resources to make its own products, software, or processes cleaner, greener, quicker, or cheaper, you most likely qualify for the credit!

What expenses can you claim?

There are typically four buckets of expenses you can pull from to calculate your eligible R&D credit savings. 

These are:

  1. W2 Wages for employees who perform, directly supervise, or directly support R&D activities based in the United States.
  2. Payments to US based contractors who are performing technical work for the company. This does not include payments to US-based agencies that distribute work overseas. It’s no secret talent is global but the R&D credit is strictly for US expenses.
  3. Supply expenses used for prototyping and development (think materials consumed pre-production).
  4. Cloud expenses as it relates to your staging and testing environment. Software companies can rack up AWS, Google Cloud, Heroku and the like.

What documentation do you need to support your R&D credit?

In order to substantiate your R&D credit, you need to provide the IRS with the proper documentation that supports your claim.  This is an extremely important part of applying for the program every year. Lack of documentation is the number one reason why credit amounts could be adjusted.

Some things to keep in mind:

  • The documentation should be from the time the R&D was done
  • It should prove that the work occurred in the fiscal year you are claiming
  • It should highlight the technical challenges to substantiate the R&D that was done and the personnel that were involved

Some examples of documentation might include:

  • Timesheets for technical staff
  • Technical documents
  • Whiteboard or product roadmaps 
  • Emails
  • Invoices/receipts
  • Contractor agreements
  • Development/Engineering notes

Again, it’s important to start gathering this information as it occurs. This will help defend your claim should you ever be audited. If you choose to work with a specialized practitioner to help you put together your R&D Tax Credit Study, a well-documented report should always be included with your credit calculations for tax filing.  

How much ROI can you expect?

You have the potential to earn back up to 10% of what you spend developing products and technologies every year. Say for example, your company paid $200k in W2 salaries to software engineers in 2020. Through the R&D study process, you can expect up to $20k in relief against your federal tax liabilities. If you spent $500k in W2 salaries, you can expect up to $50k back, and so on.

Sometimes however, this can vary based on the type of research activity and whether you do the work in house, or contract it out, as contractors hold a little less weight in the calculation than that of a wage earner.

For startups that are not yet profitable or are operating in losses, they specifically have the option to use their R&D credits as a Payroll Tax offset, meaning nearer term cash relief in the form of a FICA Tax reduction. To qualify for this, a company must be five years old or less and have less than $5MM in gross receipts for the given claim year, otherwise they take the original route to offset income tax liabilities.  

Let’s say you do qualify as a startup. Using the same example above, your $200k in W2 salaries would mean you owe $12,400 in FICA taxes annually.  That $20k credit can wipe out that liability completely in 2021!

Also, it’s not a “if you don’t use it, you lose it” situation. Any unused credits can carry forward for up to 20 years, so further adds to your long-term tax planning.

Take action to keep your company thriving

Things like runway, cash flow, burn rate, all matter for startups and need to be taken seriously. That’s why if you’re doing cutting edge work, creating new things, or challenging the status quo, the R&D tax credit is a lifesaver, especially for a young business.

And the best part? It can be claimed every year! For companies that have never claimed the credit, there may also be credits available for the prior three years. There is also a small amount of urgency here, particularly for the folks opting for the payroll application of the incentive.  The program only allows for R&D Tax Credits as a payroll offset to be elected on an originally filed return, so if you think you qualify it’s best to get this item tackled and included within your regular or extension tax filing.

 

If your company meets the standards outlined above, a discussion with an R&D expert may be worthwhile. And who knows, maybe your tax savings will help fuel your company’s next big project, key hire, or simply give you some extra breathing room this year (exhale).

The automated TaxTaker approach

TaxTaker is changing the way value-add specialty tax services operate. Our software, process, and robust support take the prior guesswork out of the painstaking intricacies of specialized tax credits.

With a smarter way of procuring the required data and tasks for tax credit studies, business owners can have access to tax benefits they are eligible for, and better spend their time maximizing their long-term budgeting goals and business objectives.

By leveraging our turn-key program, together we can empower business owners and entrepreneurs to focus on spending their time the way they want to: running and growing their business.

Interested in discussing this incentive further or determining your opportunity? Drop us a line at austen@taxtaker.com or get started here for free. 

This is a guest post from TaxTaker. TaxTaker helps companies apply for and secure non-dilutive R&D credits.

Supply Chain Strategies to Prepare you for Black Friday

Posted on by Amanda Levine

Currently, we are facing serious supply chain problems, thus increasing the need for sophisticated supply chain strategies. While supply chains may vary depending on the industry, the basics remain the same. A great way to learn how to improve supply chain is by studying supply chain strategy. 

Supply Chain Strategies to Prepare for Black Friday

Each year, Black Friday, Small Business Saturday, and Cyber Monday put businesses to the test. In 2020, shoppers in the United States spent over $34.65-billion during the five day period from Thanksgiving to Cyber Monday. During that same period, online retail websites received over 1-trillion visitors to their eCommerce platforms. With so many US shoppers choosing to shop online due to the Coronavirus pandemic, an increased trust in online shopping security, and simplicity and convenience, small businesses across the United States need to ensure that they are properly prepared to handle a surge in demand. Additionally, now that Small Business Saturday has come forward as a critical shopping day for many consumers as well, both brick and mortar and eCommerce small businesses need to be on high alert as to not miss an opportunity to maximize their sales and profits during this period. So, what can you do as a small business owner to prepare for Black Friday, Small Business Saturday, and Cyber Monday? Let us take a look at some ways a small business owner can prepare for the largest shopping week of the year. 

  • Ensure you have enough resources: Ensuring your business has enough resources to operate smoothly and to fill every order is something you should strive for all year, however, it is even more important during the holiday shopping season. The word resources does not only apply to cash on-hand. It means employees, inventory, cash, packing supplies, office supplies, warehouse space, and whatever else your business needs to function at its highest-level. If you do not have enough staff to run your business effectively, consider using a temp agency or hiring some seasonal workers to help you cover the holiday rush. If you need more inventory but you are lacking the cash to make a bulk order in the months leading up to the holiday season, consider taking out some inventory financing on existing stock to fund a large purchase. Also, make sure your place of business, whether it is a storefront or a warehouse, has all the tools necessary to be successful. Everything from printer paper to packing tape must be covered to ensure there are not any unexpected interruptions to the natural flow of your business. If you need additional storage space to take on the increased inventory, consider installing new shelving or rent some short term storage from another place of business nearby. The point is, it is the responsibility of any small business owner to make sure you have all the resources necessary to fill all orders safely, efficiently, and effectively. 
  • Focus on customer experience: Customer experience is an essential component of running a business. How would you feel if you received one of your packages in the mail for a holiday gift and it was damaged? Empathy is one of the most powerful tools a business owner can use to make sure they are being customer centered and giving the best customer experience possible. If you are a brick and mortar small business, do you have a website where customers can comfortably shop your store without having to come into your location? This is especially important these days because of the pandemic and simply to be able to compete with other companies who offer both a brick and mortar and online shopping experience. Whether you are sending orders from a warehouse or packing orders in front of customers at a retail store, make sure to take the extra time to wrap the order with care and to pack it to prevent damages from occurring when in transit. This is a simple yet effective way to ensure your customer has a great experience. 
  • Ensure you have enough inventory: During Black Friday and Cyber Monday, if an item is out of stock, you are going to disappoint many customers. Also, the holiday season is just beginning and the chances of receiving a back-order in time to ship out to a customer as a holiday gift shrinks exponentially each day. USPS, UPS, FedEX, and DHL are already stressed to the max during this time of year, so accounting for increased shipping times, you will want to make sure you have enough inventory to cover every order that comes in during the holiday shopping season. It may be wise to make sure to do a large bulk order in October so that you have enough inventory on hand to handle the upsurge. If you do not have the cash reserves to complete the bulk order, then consider inventory financing to pay for the order upfront and then pay back the loan monthly or once the inventory sells. 
  • Expand the sales window: More and more businesses are expanding their Black Friday, Small Business Saturday, and Cyber Monday sales for longer periods of time to help alleviate some of the stress the holiday shopping season can bring during those days. Consider starting a sale earlier in order to provide ample time to get the merchandise to the customer before the holiday shipping season is in full swing and when shipping times increase dramatically. 
  • Have logistics partners in place: However you plan to ship out your holiday shopping season order, whether it is UPS, FedEx, USPS, or some other carrier, it is important to set up a meeting with your logistics representative in the weeks leading up to the busy season. Maybe coordinate additional pick-up times, later pick-up times, essentially, if there is any way your logistics partners can be of additional assistance during this extremely busy time, they are there to help and you should not be afraid to ask for their support. 
  • Synchronization with your marketing team: Before Black Friday and Cyber Monday, as a small business owner you will want to make sure that your marketing team and your operations team are in sync. Are there projected sales figures that could be used to help the purchasing team stock up on the correct items? Is there going to be special promotions on select items that there should be ample stock on? Basically, what are the special offerings, when do they go into effect, and how should the operations team prepare for them? 

Even if you prepare religiously, there are bound to be some shortcomings or mistakes that are made. Maybe a certain item was accidentally left off a purchasing PO and now you have to cancel orders for that item. Maybe you are short-staffed and you find it hard to keep up with the large influx of orders. It’s ok. Black Friday and Cyber Monday can be stressful for any business owner, but do your best to keep up with the increased demand, prepare where you can, and if all goes well, enjoy the welcomed surge in revenue and profit. 

How Kickfurther can help

Keeping enough inventory on hand is an important part of your Holiday shopping season strategy. Part of timing the flow of inventory is understanding the supply chain. Some companies may struggle with cash flow, thus forcing them to order inventory late. While this may solve the cash flow problem, it may also cause lost sales or unhappy customers. This is where Kickfurther can step in. We connect brands to a community of eager buyers who help fund the inventory on consignment and give brands the flexibility to pay that back as they receive cash from their sales. This alleviates the cash-flow pinch that lenders can cause without customized repayment schedules, allowing your brand to scale quickly without impeding your ability to maintain inventory or financial flexibility.

 

How to Choose the Best Inventory Financing Option For Your Business

Posted on by Amanda Levine

Inventory financing is an alternative financing product that helps businesses buy the stock that they need to meet consumer demand.

Ask any business owner and they would tell you that two of the biggest issues that product-oriented businesses face are sustaining healthy cash flow and maintaining optimal inventory levels. While it’s true that there are better and more flexible financing options out there, the main advantage of inventory financing is that it’s easier to acquire.

In this article, we will walk you through the ins and outs of inventory financing as well as the various factors to consider when choosing an inventory financing product. But before anything else, let’s go back to basics – what exactly is inventory financing?

What is inventory financing?

Inventory financing is a form of asset-based lending that enables businesses to use their inventory as collateral and receive either a term loan or a line of credit. Businesses that are currently experiencing poor cash flow can obtain extra cash through inventory financing and cover their inventory purchases without having to reallocate costs from other areas of the business.

Keep in mind, however, that inventory financing loans will use your inventory as collateral. To be able to qualify for an inventory financing loan, it’s standard procedure for a financial institution to appraise your inventory to determine the terms of your loan.

How does inventory financing work?

When it comes to inventory financing, it’s important to bear in mind that your lender will only finance a portion of your inventory’s appraised value. Essentially, the loan you acquire will depend on the loan-to-value (LTV) ratio set by your prospective lender.

As an asset-based loan, an inventory loan’s LTV is calculated by dividing the amount borrowed by the appraised value of the asset being put up as collateral. As a rule of thumb, most inventory lending transactions have an LTV of 50% to 80%. For instance, if the appraised value of your asset is worth $100,000, chances are you would only be eligible to borrow a loan amount of at least $50,000.

Does my business qualify for inventory financing?

Businesses that are expanding and experiencing a spike in demand should consider an inventory financing loan as an alternative financing solution to their funding issues. While it’s true that inventory loans might not be the cheapest financing option out there, it’s one of the easiest financing products to secure. Like other business loans, the requirements for an inventory financing loan vary from one lender to another. If you’re seriously considering an inventory financing loan for your small business, then there are a few things to keep in mind:

  • If your business experiences low inventory turnover, lenders may see this as a reason not to approve your loan application.
  • Your business must be operational for at least one year before you can acquire an inventory financing loan.
  • You must be willing to provide the necessary financial documents to prove that your business is profitable.
  • Inventory financing is often seen as a riskier type of loan to lenders so don’t be surprised if you encounter high interest rates.
  • In inventory lending, businesses must be willing to put up their inventory purchases as collateral.
  • Lastly, your business must undergo a due diligence process that involves an examination of your financial statements and an appraisal of your inventory.
  • Pro tip: To increase the chances of getting approved for a loan, speak with your prospective lender directly to determine what their prerequisites are.

What is the importance of inventory financing?

Whether it’s because of poor credit history or low cash flow, it’s a known fact that small businesses find it difficult to secure business loans. With inventory financing, small businesses have another financing product to access if they can’t get approved for a bank loan.

Inventory financing is a great way to secure additional working capital for inventory purchases. It provides businesses with a plethora of benefits from funding busy seasons to seizing significant business opportunities. Perhaps one of the most significant advantages of inventory funding is that it’s available for smaller businesses that may not be able to access other more traditional types of funding.

What are the different types of inventory financing?

What makes an inventory loan attractive to businesses is the accessibility it offers. Typically, lenders provide businesses with two main types of inventory financing: term loans and lines of credit. An inventory loan is widely regarded as a short-term loan that businesses use to keep their shelves stocked during periods of low cash flow. Like regular term loans, inventory term loans come in the form of an upfront payment that businesses pay with interest.

On the other hand, an inventory line of credit is often used by businesses to purchase inventory as needed. Unlike term loans, lines of credit provide a revolving line that businesses can draw cash from as they see fit. Both types of inventory financing business loans help small to medium-sized businesses provide a greater customer experience by keeping their most popular items in stock during peak shopping seasons.

Are there alternatives to inventory financing?

Poor cash flow and insufficient capital are two of the biggest roadblocks that business owners face when running a business. Depending on your qualifications and the type of business you have, you may be eligible for other types of financing that may provide better value when it comes to your current financial requirements. Let’s check out some of the most popular alternatives to inventory financing.

  • Vendor inventory financing – Vendor inventory financing, also known as trade credit, is a common funding arrangement that enables businesses to acquire a loan directly from a vendor which could then be used to buy a vendor’s products. The only downside to this type of financing is that it may only be available for businesses that have established a solid business relationship with their vendors.
  • Merchant cash advance – A merchant cash advance is a funding solution that involves lenders providing cash advances to businesses in exchange for an agreed-upon percentage of future sales. The advanced amount, payment terms, and interest rates are typically agreed upon by the borrower and the lender before a contract is drawn up.
  • Crowdfunding – Crowdfunding is a relatively new method of raising capital to finance projects and business ideas. A crowdfunding campaign involves businesses asking a large pool of investors to donate money through a third-party crowdfunding platform. Crowdfunding campaigns allow businesses to tap into a wider investor pool and enjoy a more flexible way to raise the necessary funding they need to keep their operations going.

How can Kickfurther help my business?

If you have exhausted other ways to secure additional financing, check out Kickfurther. We’re an alternative funding option for businesses to raise the necessary working capital to be used for inventory purchases. It is an online inventory financing platform that connects brands to a community of eager buyers who help fund a business’ inventory on consignment. In return, individual backers earn cash when a business successfully sells their inventory.

This option alleviates the cash-flow pinch that lenders can cause without customized repayment schedules – allowing businesses to scale quickly without compromising inventory purchases.

Final Thoughts: Which inventory financing option is right for my business?

While it’s true that comparing your inventory financing options can be a tedious process, it’s important to understand that loan programs differ from one lender to another. Some loan products may also fit your business better than others. Make sure to choose a financing option that not only offers competitive interest rates but also aids you in making your business more sustainable in the long run.