What’s Human Resources (HR)?
Human resources (HR) is the department in a business that’s responsible for all things worker-related. Including recruitment, vetting, selecting, hiring, onboarding, training, promoting, paying, and firing employees and independent contractors. HR is also the division that remains on top of new laws guiding how employees will need to be handled throughout the hiring, working, and shooting procedure.
HR is considered by many small business strategists are the most significant of all business resources. That’s because workers can acquire new skills, thereby increasing the magnitude of a provider’s competitive edge over time. Other resources just don’t have that capability.
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The Trend Toward Outsourcing
As with many facets of business, HR is 1 function that some companies now outsource. By handing over responsibility to an external agency to find, hire, manage, and cover qualified employees, the business can remain focused on developing its core competencies. At least that is the thinking, which appears to be gaining ground.
Some different types of organizations which will handle your HR responsibilities include:
- Professional employer organization (PEO) — PEOs assume complete responsibility for all aspects of your HR function. Including finding and hiring employees and placing their pay rate. Employees work for both the PEO and your organization.
- Human resource outsourcer (HRO) — Firms uncomfortable with handing over most responsibility and control of their employee base could be happier with an HRO, which manages all HR activities but doesn’t actually employ workers.
- E-services — Using an internet HR platform enables small companies to keep control of their HR activities while leveraging information technology to do it more effectively.
The list of tasks that the HR department manages is quite lengthy. Apart from hiring and firing, HR professionals also take care of:
- Background checks
- Drug Testing
- Training and professional development
- Compensation plan development
- Employee assistance plan
- Payroll direction
- Benefits administration
- Employee relations
A well-functioning HR department makes sure that a company has all the perfect employees it requires, at the perfect time, at a reasonable cost, and it helps support the continuing development of these employees, providing the firm with an appreciating human advantage.
What’s Inventory Turnover?
Inventory turnover is a sign of how frequently a business sells its physical products. The turnover rate informs the company if its products sell fast or gradually. This information, in turn, helps the business make business decisions.
Inventory turnover can help a company understand a number of specifics, including whether:
- Merchandise pricing should be corrected
- Purchasing schedules should change
- Manufacturing volumes must change
- Promotions are Required to sell surplus inventory
The inventory turnover rate is very important with perishable items like produce and style, which can be ever-changing. Too many”jeggings” today could mean unsold inventory (also called dead inventory ) and a monetary loss tomorrow.
Additionally, saving inventory costs money that the stock is not generating as it sits in a warehouse or elsewhere. Unsold inventory can become obsolete and unsellable, which makes it a potential financial liability for a firm.
The Way to Calculate Inventory Turnover Ratio
Accountants use a simple formula to calculate the turnover rate or ratio: Cost of goods sold divided by average inventory. The cost of goods sold, which is generally reported on the income statement, is the cost of materials for the item plus labor. Average inventory is determined by adding together the stock for your first month in a given period to the previous month in the period and dividing it by 2.
Here is the equation: Inventory turnover ratio = cost of goods sold ÷ average stock.
Let us say a self-published writer named Bob sells printed copies of his book on his web page, at online book retailers, and on site. His cost of goods on his income statement is $1,000. His beginning inventory is $3,000 and his end inventory for the period is $4,000 (averaging to $3,500). Applying the formula, his ratio is 1,000 ÷ 3,500 = .29 turnover. That means he sold nearly a third of his stock in that period.
Is that number bad or good? It depends on Bob’s goals for publication sales and business patterns.
Applying Inventory Turnover Ratio to a Small Business
A low stock turnover could indicate that the item is not priced correctly, that there is not much demand for the item, or it isn’t positioned correctly.
A high inventory turnover may signify that the item is priced too low, the firm could sell even more of these if they had them to market, or that the firm didn’t purchase or manufacture enough to meet demand.
A high turnover rate is far better than a low rate except when it means you can not keep the item in stock, which means you lose sales opportunities. Any shopper that has been frustrated by an empty place on a store shelf where the product they would like to purchase usually stays understands that concept.