7 Tips for Small Business Inventory Management
If you already own or are gearing up to start a small business, one thing you have to pay extra attention to is inventory management. For small businesses, inventory management is one of the most integral parts of the entire process as it helps you evaluate how well your business is doing and whether or not it’s on the track to succeed.
With this in mind, you may be wondering how to go about small business inventory management. It might sound simple enough, but a lot can go wrong or become complicated if you aren’t careful and don’t have a firm grasp on what you’re doing.
Thankfully, we can help you ensure that your small business inventory management endeavors are successful and smooth at all times. So, how do you plan to go about small business inventory management? Whatever you have in mind, these seven tips will help you stay on the right track for growth and success.
Why Small Business Inventory Management Is So Important
Throughout its lifespan, how would you say your small business’s inventory management has been going? Are the products you’re selling available when needed? Have you lost business because certain items were out of stock during periods of high demand? Or did you have the other problem of losing money because you ordered more items than there was demand for?
Whatever issues you have faced with your small business inventory management, you surely know that proper inventory management is imperative to your business’s success because it ensures that customers are happy, business is booming, and stable growth is on the horizon.
Small business inventory management itself is known as the part of the supply chain that intends for the right products and items to be in the right quantity for sale at the right time. In other words: supply adequately meets demand so there’s never too little or too much. When you are doing inventory management the right way, you are keeping track of your inventory to ensure that the process of product sales runs smoothly at all times, which can only mean good things for your business.
So now that you now good small business inventory management is so important, how do you do it? And once you’ve done it, how do you keep it up? It might seem like a lot of guesswork to know what the market will call for and how to deliver, and market research can only take you so far.
Fortunately for you, we can offer an answer: stick with what you already know while adding a few fail-proof tools to your repertoire. This means knowing how many products your business should have in inventory at all times (meaning in the warehouse or stockroom) and using strategies to ensure you’re always on top of inventory management.
Our seven small business management tips can be part of your toolbox and management strategies, so let’s check them out.
7 Tips for Small Business Inventory Management You Can Really Use
1. Invest in Good Inventory Management Software
Inventory management software is one of the best ways to improve how you manage your small business inventory. There are many software options that can help small businesses digitize their inventory in a way that helps them keep track of it, forecast demand, and analyze inventory from various devices like your smartphone, tablet, or computer.
Finale Inventory offers an excellent cloud inventory management software system that is perfect for small and growing businesses. It’s easy to understand, super adaptable, and affordable to boot. With Finale software, a variety of inventory management applications for warehouse management and multi-channel e-commerce inventory customers are supported, giving you the user many options of how to best use your management system. Finale also supports barcoding, serial number tracking, QuickBooks, multi-locations, and much more. Learn more about the software system here.
2. Identify Any Low-Turn Stock
Low-turn stock is a product or products and items that have not sold in the last 6-12 months. If this is the case with certain products, chances are it is now time to stop stocking them. Be aware that some items may just have a higher sales velocity at different times of the year (think Halloween costumes in October, bathing suits and shorts in spring and summer), so be discerning about what you do and don’t restock.
When you’ve identified which products have a low sales velocity no matter what, then you can make the decision to stop stocking them. Of course, you have to be strategic about how you get rid of the remaining product or products in question, and there are many creative ways to do so. For one, you can create a special discount or promotion to move the products off the shelves. This helps your business immensely as excess stock wastes time, space, and capital.
In order to keep track of how long a certain product has been in stock, your inventory management software should be able to keep the listing up to date in real time. If you do not have the software just yet, you might just notice a product or products that have been in the stockroom for about as long as you’ve been in business. Anything with an overly long stay will eventually have to go!
3. Utilize the FIFO Approach
FIFO stands for “first in, first out.” When it comes to small business inventory management, this means that products should be sold in the same chronological order in which they were purchased or created. So what comes in first, must go out first, and so on.
This rule is useful for all businesses and their products, but it is especially useful for goods that are perishable like plants, makeup, food, and other organic (or organic based) items. A great way to actively use the FIFO approach is to model your stockroom or warehouse after it: this means that older products are in the front and new items are added to the back. This way, the first in is first out all the time.
4. Always Track your Stock Levels
This is another job for business inventory software, but we mention it again because it is truly that important. You need to have a strong system in place to keep track of your stock levels so that you know what to stop ordering, what needs to be shipped off first, and what is a new arrival. Many small businesses prioritize their more expensive products during this approach as these are likely in higher demand and cost the business the most money. Finale small business inventory management software is perfect for carrying out this job.
5. Audit Your Stock
To ensure that everything is as up to date as possible, you don’t only want to rely on your business inventory management software the same way you wouldn’t only rely on yourself.
This is to say that even with the best software in the business, you should also be counting your inventory yourself to make sure that all the numbers add up and match up. Computers can make errors just like humans, so why not double check for optimal safety?
There are different ways to audit your stock: some businesses audit their stock annually, others conduct a year-end physical inventory (meaning a team goes through to count stock) in which the stock is counted, recounted and spot-checked to ensure everything adds up correctly. However you do it, make sure the job gets done.
6. Consider Hiring a Stock Controller
Stock control shows the amount of inventory your small business holds at any time and contains everything from raw materials to finished products. If you have a business that creates products with a lot of different parts, it might be helpful to hire a stock controller in addition to your small business inventory management software. Your stock controller will purchase all orders, receive deliveries, and be totally responsible for ensuring that products coming into the warehouse match up with what was ordered.
7. Remember Quality Control
Finally, you never ever want to forget about quality control. No matter what you sell, you want to make sure that your product looks good, works right, and does what it’s supposed to do. Some businesses have a person in charge of quality control while others have a team who do quick checks during stock audits or when the stock is coming in to check for damages and other issues.
When your product is of the highest quality, it shows your customers that you care about what your business produces. This also helps with inventory management because you can ensure that your shelves are stocked with only the best products at all times. Broken, faulty, or aesthetically displeasing products won’t be cluttering your storeroom, giving your best products the spotlight they deserve.
We hope these 7 tips for small business inventory management will help you and your small business continue to grow!