When starting a small business, business owners often think about things like the storefront, displays and branding. They think of smiling Team Members and happy customers. Typically the images of the shelves and cupboards in the back stockroom don’t fill their heads.
But inventory is a critical component of your business. Sales are made and lost because of inventory control, so it can’t be overlooked or left to sort itself out. Here are some tips for how to manage inventory for your small business.
Look back to look ahead
Forecasting is vital when running a business, especially if you’re selling physical products. It’s essential that you know how much of a product you can expect to sell and when.
When a customer comes to your store, if you don’t have what they have come in for, you’ll lose the sale. And if you have too much stock on hand of an item that isn’t selling, you lose money right off the bat, both in what you paid for and what it costs you to store.
When ordering your stock, look back at previous years to see what you sold and when. This will give you a much better idea of what you’ll need when ordering something new.
This can be difficult, considering the last few years have been anything but ordinary as far as retail traffic goes. Do your best but keep in mind what was going on at the same time last year and what might be different about this year.
Reconcile discrepancies
Investigate what went wrong if you find a variance in physical inventory against what your system says. You could have a case of theft, internal or external. You may have a Team Member who doesn’t know how to ring up items correctly. Or there could be a faulty process resulting in too much or too little of something.
Whatever the reason, you need to know what happened. It’s the only way the problem will get solved.
Implement POS software
Modern point-of-sale systems are game changers in the retail industry. What used to be manual work, marking down sales, going back and comparing that against what’s in the register, and so on, is now all done for you.
With a sound POS system and staff who are well-trained to use it, you really only need to audit your inventory at the end of the financial year and when something is amiss. This will save you a colossal amount of time and energy.
It also makes forecasting easier, which helps you make the right decisions when ordering more products. It’s a win all around and is a must for every business that has inventory to manage.
FIFO
As products arrive, they should also be the first ones sold (first in, first out). This keeps your inventory from spoiling, expiring, or becoming out-of-date. Electronic products may have depleted batteries if left on the shelf for too long, resulting in a poor customer experience. Fabric products can gather dust or become unfashionable.
No matter what you’re selling, it’s a good practice to make sure you’re following the principles of first in, first out. It keeps everything fresh, and you don’t risk losing money on products becoming stale (literally or figuratively).
Consider hiring a stock controller
If you find that your inventory management tasks are taking over your whole business, consider outsourcing the job. A stock controller manages all the day-to-day inventory movements of a business. Their job is to ensure you have what you need when you need it.
Final thoughts
Owning and running a business with inventory can be fun and rewarding, but it’s not without challenges. Put some solid inventory controls in place, and you’ll find yourself maximizing profits and pleasing customers.
If you have any questions, feel free to Join the conversation…