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Wednesday, April 18, 2012

Setting Up SKUs For Your Greenhouse

As you prepare your greenhouse for its opening weekend, it’s important to make sure your POS system is ready too. To track the performance of your live goods with accuracy, you need to be sure you are recording the true gross profit on the items you’re selling.

First, identify the SKUs you will be using to sell live goods. Use whatever number of SKUs will work best, and make sure you clearly communicate to your employees which SKUs are to be used for which products. Also, make sure these SKUs track quantities on hand. Don’t use non-diminishing or non-stock SKUs. Next, make sure that you receive the live items into your system by a) entering the correct quantity for each SKU and b) using the actual cost of the goods. As with any other purchase, the dollar value going into your POS inventory should match the total on each invoice. Be sure to continue this practice throughout the season as additional deliveries come in.

There’s no question that you will encounter damage and spoilage when you’re selling live goods. In addition, there will likely be items that are rung through incorrectly during the season. These factors are ultimately part of your Cost of Goods Sold. When the plants are gone and you close your greenhouse down, take a look at the inventory count for each SKU. If you still show a positive count, ring up that quantity, selling those items to yourself for $.01 each. For items that show a negative quantity on hand, you can either ring up a credit (return) transaction at $.01 each, or enter a purchasing transaction that buys those items at a cost of $.01 each, bringing all of the quantities on hand for your live goods to zero.

You may be thinking “Why can’t I just adjust the stock counts?” By simply adjusting the quantities on hand back to zero, you won’t get an accurate picture of your true gross margin on live goods. When you sell or buy back the incorrect quantities, the total amount you paid for plants is accounted for in your overall Cost of Goods Sold. If you simply make stock adjustments, your reporting doesn’t capture the cost of plants that were lost or discarded. It is for this same reason that you shouldn’t use non-diminishing or non-stock SKUs.

By taking these few steps to maintain accuracy, you’ll be able to accurately see the success of your plant sales and the profit they contribute to your business. You can use this same strategy for selling pumpkins in the fall and Christmas trees during the holidays. If you have any questions, feel free to contact me at ext. 599 or email