It’s currently summer, so most people are thinking about attending barbecues and buying fireworks — not planning their holiday shopping season. However, if you run a brick-and-mortar store or ecommerce business, this is the best time to begin thinking about the holiday inventory.

Successful planning in June and July will set you up for profitability in November, December and January. Here are six ways you can successfully plan for increased inventory demand during the holiday season.

Related: July Is Just Early Enough to Start Planning for Holiday Selling

1. Come up with a timeline

The holiday season is the most profitable sales period for most retailers. According to the National Retail Federation (NRF), holiday sales exceeded $964 billion in 2023, a 3.8% increase from the previous year.

So start by coming up with a timeline of key dates when you can anticipate increased sales and demand. These dates most likely include:

Think about the shipping cut-off dates for each of these holidays, and add them to your calendar. That way, you can let customers know the last days to receive standard and expedited shipping on their orders.

2. Determine what you’ll need

Next, you’ll forecast the types and amount of inventory you’ll need for the holiday season. Having enough inventory on hand to meet customer demand will ensure you don’t lose out on business to competitors. It will also help you avoid overstocking items you don’t need.

The best way to estimate holiday demand is by looking at previous sales data and taking note of customers’ shopping patterns. Of course, shopping habits can change slightly from year to year, so you also want to look at industry trends. For example, you can see what your competitors are doing and how they’re preparing for the holidays. And if you have an NRF membership, you’ll receive insights into consumer and retail trends.

Once you’ve done adequate research, you can begin planning your holiday inventory. You can also start to think about when you should begin marketing and how much staff you’ll need to have on hand to manage the increased demand.

3. Do an inventory audit

An inventory audit involves regularly reviewing your inventory for accuracy. During an inventory audit, you’ll verify that your physical inventory matches what you’ve recorded in your financial records. An inventory audit can also help you spot inefficiencies in your supply chain.

To perform an inventory audit, you’ll start by organizing your inventory to reduce the odds of miscounting items. From there, you’ll begin physically counting and recording each item into your inventory management software.

Once the audit is complete, you’ll reconcile the count with your inventory records. If there are any discrepancies, you can investigate where they came from. You can also begin developing a plan to reduce discrepancies in the future.

Related: You Should Be Planning Now for Holiday Sales — Here’s How

4. Check in with your suppliers

Once you know how much inventory you’ll need to meet the holiday demand, you should begin reaching out to your suppliers. Checking in early with your suppliers will ensure you’re on the same page and you’re not caught off-guard by changes to their order times or pricing.

It’s also a good idea to ask if any of your suppliers offer pre-sale discounts or promotional pricing. It never hurts to ask, and some may be willing to give you a discount for large orders.

5. Think about financing

As you begin planning for your holiday inventory, one of the biggest issues is how you’re going to pay for everything. Many small businesses don’t have the cash flow to pay for a large inventory order, shipping supplies and the unexpected costs that come along with it.

If you find yourself in this place, financing may be a good solution. Inventory financing is a one-time loan or ongoing line of credit you can use to purchase inventory for your business. The inventory purchased is used as collateral for the loan.

Financing can help you maintain consistent cash flow during seasonal fluctuations in your business. It will also give you the flexibility to respond to increased customer demand. If you’re interested in exploring your financing options, you should begin looking into this now so you’ll be well prepared come fall.

6. Place your orders early

Many customers begin their holiday shopping in September and October out of concern over product shortages and slow shipping times. So you want to place your inventory orders as soon as possible so you can capture those early shoppers.

However, it’s impossible to forecast exactly how much inventory you’ll need, and you’re bound to run out of items. So you also want to have a plan for how you can quickly replenish out-of-stock items. For example, a good inventory management system will alert you when you’re running low on certain items and need to re-order.

Related: Keep Calm and Holiday On: How to Plan for the Holidays Year-Round