Putting on my hat as business mentor, I casually asked my Jerusalem client today how many units of stock he possessed. A one-person operation, in business for less than a year, I did not expect a large number.

Sure enough, without being too precise, I received an answer commensurate to one month’s sales. Good start.

What is the value of that stock? I tested the response and found it unreliable. And how much of this is dead stock? Again, no depth to the stat.

The point is that within a few months of starting out, the client had failed to realise that they had already “burnt” a certain level of capital. This was not going to be converted into money in their pocket. Likewise, the client had yet to appreciate (until today) that the gap between the desired revenues and the hole in the bank account could be explained by the units in the stores….a.k.a “stock”.

Ouch! Suddenly, the importance of planning stock took on a new and higher meaning. The net damage at this stage is only a few thousand shekels  – one American dollar is worth nearly 4 shekels – but this is still a fortune for my client. The good news is that they can start to correct their mistakes relatively early on in the game.

Now compare that scenario to “Kika, Israel“. The Austrian home goods multinational opened its doors in the Holyland less than a year ago to a massive PR blitz. Thousands flocked in during the first few days of trading. But late last week, the Israel franchisee ceased operations.

How come? Those running the company, both at parent and local level, are coated in retail experience. Yes, they paid high salaries to those at the top and invested megabucks in marketing. 

However, they were not able to pay suppliers. To me that is a euphemism for not controlling stock flow up to and including the point of sale. In other words, for all the hullabaloo, nobody strong enough was watching the basics, which was what my client was learning today.

It will be interesting to see who is in their jobs in a month’s time and continuing to trade – one little businessman or the bigwigs at Kika Israel?