What is Open to Buy?
Open to Buy (OTB) tells you how much inventory you can purchase in a given period without trapping cash, bloating stock, or creating markdown pressure. It aligns purchasing with reality: planned sales, current inventory, and your end-of-month target.
The classic OTB formula
Many retailers use a version of:
OTB = Planned Sales + Planned EOM Inventory – Current Inventory
In practice, you also account for on‑order receipts, timing, and markdown expectations. Otherwise the “formula” feels right while the bank account says no.
The pain points OTB solves
- Sales are up but cash is tight (because inventory purchases outpaced reality).
- Store is full, but nothing is selling (overbuying + slow turn).
- Markdowns keep breaking your heart (clearance is the break‑up fee).
- Vendor pressure drives decisions (OTB gives you a clean, defensible “no”).
- Year‑end inventory tax exposure (excess on‑hand becomes a liability).
How to use OTB without hating your life
- Plan sales conservatively. Goals are not plans. Reality is the plan.
- Set an ending inventory target. Too high traps cash. Too low causes stockouts and panic buying.
- Subtract what you already own. Inventory is cash you already spent.
- Let the number say “no.” If the plan doesn’t support it, it waits.
- Review weekly. OTB is monthly. Discipline is weekly.
Why Hallman Company LLC
We don’t sell inventory “tips.” We implement a repeatable cadence and enforce the discipline that keeps retailers out of cash trouble. Clients see the plan in their portal, understand the boundaries, and stop making expensive decisions under pressure.
Coming soon: clients can graduate into a Retail Command Center powered by 1SMB with HighLevel Retail (HLR) plug‑in capabilities.