One of the ways that businesses maximize their funds is by utilizing turnover to increase their cash flow.
Instead of purchasing a year’s supply of whatsits in order to make their widgets, they instead purchase just enough to get by for a certain time period like a week or a month.
The store I work at uses this principle. They receive two shipments a week so the general manager strives to order just enough stock to make it to the next shipment. This allows them to maximize their profit by turning over their stock on a regular basis.
It’s not a perfect science. Unexpected bad weather causes runs on such things like bread and milk but overall, in the time I’ve worked there it is quite effective.
Restaurants and other businesses do the same thing. I’ve worked many a time where we had to stretch our supplies through the evening because our truck wasn’t due until morning.
I’ve been thinking about that lately. I’ve always been a “more is better” person. I feel safer when I have stockpiles on hand. I spent so many years in economic uncertainty during my marriage that I tend to stock up instinctively. I did that not too long ago with groceries and I’ve got a stockpile of paper, clothing, and other items that demonstrates that I returned to those old habits several years ago.
That said, I’m beginning to wonder if some facets of minimalism might make economic sense. I can order supplies online on an as-needed basis. I can pick up groceries during my shifts at work. I’ve got an emergency fund established and my income is fairly stable these days. Do I really need to stock up as much now as I have in the past?
In some cases, stocking up makes financial sense. Purchasing melamine sponges (magic erasers) in bulk saved me a small fortune. But in many cases, it might not be as wise.
What if, instead of buying certain items in bulk, I instead purchased them only as needed? I could use the money saved to make more money that way. If the cost difference between buying as needed and buying in bulk is negligible, I may come out ahead in the long run.
I would definitely free up some space in this tiny house if I applied that principle.
I have decided to experiment as a result. I have placed a moratorium on certain supplies I have in bulk like paper, pencils, pens, clothing, and food. I no longer need a large wardrobe since I can now wash clothing on a daily basis and the other items can be quickly attained either online or locally when I need them.
If this girl can conquer her fear of lack, she may be able to not only free up some space around her home but to increase the amount of money she has available for investment each month.
With that thought in mind, instead of purchasing a three-month supply of flea treatment for my pets the way I normally do, I opted instead to purchase just a one-month supply for my dogs. The lone cat we have (Loki died a while back) has enough to last him for a while.
Let’s see what happens, shall we?