Stop losing money! Sometimes, discounts can save your dead stock.
Take Kamau who runs a hardware shop.
Six months ago, he bought a batch of expensive decorative tiles because the supplier offered him a good deal.
He expected to make a healthy profit.
Six months later, most of the tiles are still sitting in his store.
Meanwhile, cement and plumbing materials are selling almost every week, but he has limited cash to restock them.
Kamau has a choice: keep waiting for someone to buy the tiles at his preferred price or offer a discount and recover some of his money.
Here's what every business owner should understand:
- Slow-moving stock ties up cash.
That money could be buying products customers actually need. You also incur storage, handling and other holding costs while the stock sits.
- A smaller margin on fast-moving stock can be more valuable.
Imagine Product A earns you KSh 1,000 profit but takes three months to sell.
Product B earns KSh 300 but sells every week.
Product B could generate more profit over time because you recover and reinvest your cash faster.
- Know when to discount.
Don't wait indefinitely for your preferred selling price.
Consider a controlled discount, bundle offer or clearance sale to free up cash and storage space.
The goal isn't to discount everything.
It's to stop allowing slow-moving stock to consume money that could be working harder elsewhere.
Remember:
A big margin on stock that doesn't move means very little.
Sometimes, a smaller margin earned repeatedly is what keeps your business growing.
