The basic rule of buying: buy only what you know that you can sell.

My name is Daina Johnson and I own a business in La Canada, California, called Tudor Cottage. I've been in business for 25 years. There are some things that I've been doing right and a lot of things that I should have done differently.

One bad habit developed through the '80s and the '90s and has grown into a bit of a problem. Simply stated, I've being buying too much product and have lost control of my inventory. In the '80s and '90s, customers were buying just about anything that we present. I kept buying as I had always bought, as though there were no changes in the buying habits of our customers, and I failed to read their message.

Also, I got into the habit of buying items in larger numbers, especially if a manufacturer offered a discount or free freight. This method of buying had worked successfully for a long time, but then I needed a warehouse to store the goods. For a while, I kept buying as I always had. Perhaps I felt a need to fill the space. I finally realized my error when it dawned on me that I was renting a 1,000 square-foot space to warehouse inventory for a 2,000 square-foot store.

I am now thinning out this huge inventory, and I am much more careful at the gift shows. I'll not be swayed by the promises of discounts or free freight. If I'm not sure I can sell the amount of product necessary to meet the discount requirements, I won't buy the item. I'll keep closer track of what sells, and then I'll make that decision to reorder at that time. I've found that reordering is really very easy.

When I attend gift shows, and I go to about four of them a year, I always attend seminars. Recently, I sat in on a discussion that covered the topic of planning and controlling inventory. One gem that I picked up, something that I have always known but I obviously opted to ignore, is the basic rule of buying: buy only what you know that you can sell. If you buy a dozen widgets, know that you must sell seven widgets in order to begin to make your profit. I'm in the process of correcting my bad habit, and I assume that in the years to come, my store will get back on track and I shall have a control of my inventory.