Inventory management is one of the most important aspects of running a small business, whether you are already in business or just getting ready to start one. Inventory management is one of the most significant aspects of the process for a small business. You can use it to assess your business’ performance and ensure it’s on track for success.
With these points in mind, it’s only natural that you may wonder how a small business should keep inventory. Despite how simple it may seem, there can be a lot of things that go wrong or become complicated if you aren’t careful.
In this article, we can help you ensure the success and smooth operation of your inventory management for small businesses.
The importance of inventory management for small businesses
What has been the status of inventory management within your company throughout its history? Has your inventory always been available? When high-demand periods arise, have you lost customers because certain items are out of stock? Has it ever happened to you that you purchased more merchandise than there was a need for?
It is obvious that inventory management is a vital part of your company’s success, regardless of the challenges you’ve faced. Customers are happy, businesses are flourishing, and there is stable growth ahead.
An inventory management strategy for a small business involves making sure that the right products are available at the right time in the right quantity. Therefore, the supply to demand ratio is always just right, so there’s never too much or too little. Maintaining and managing your inventory in the right manner allows you to ensure product sales run smoothly at all times, contributing to the success of your business.
7 Tips for Small Business Inventory Management You Can Really Use
How do you keep track of inventory once you understand the importance of it? And how do you keep track of it once you have done it? Knowing what the market will want and how to give it to them may seem like a lot of guesswork, and market research can only take you so far.
The tips described here will hopefully assist you in defining your inventory management strategy
1. Implement a good inventory management system
Small businesses can improve their inventory management using inventory management software. Small businesses can digitize their inventory using software options that help them keep track of it, forecast demand and analyze it from a variety of devices like their smartphones, tablets or computers.
2. Identify any low-turnover stocks
Inventory that has not sold in the last six to twelve months is low-turn stock. If this is the case, you should likely stop stocking them now. It is important to remember that some items have higher sales velocity at different times of the year, like Halloween costumes in October or summer bathing suits, so take care when restocking.
It is possible to stop stocking products that have a low sales velocity regardless of the season once you have identified them. There are a number of creative ways to get rid of the remaining product or products in question, but you have to be strategic about doing so. One possibility is to offer special discounts or promotions to help move the product off the shelves. Your business benefits greatly from this technique as excess stock takes up time, space, and money. Your inventory management software should keep the listing up to date in real time, so you know how long a certain product has been in stock.
3. Take a FIFO approach
In inventory management for small businesses, products should be sold in the same order they were purchased or created. This is known as FIFO. In other words, what comes in first has to go out first. As a result, FIFO can be a useful approach for many inventory-based accounting methods, as well as having tax benefits in certain cases.
Every business and their products can benefit from this rule, and it’s especially useful when it comes to perishable goods such as plants, makeup, and food.
4. Keeping track of your stocks is always a good idea
Business inventory software has another job to do. This is worth repeating since it is quite crucial. In order to keep track of your stock levels, make sure you keep a strong system in place, so you know what to stop ordering, what needs to be shipped first, and what products are new. These products are likely to be in higher demand and cost businesses the most money, so many small businesses use this approach to prioritize their more expensive products.
5. Audit Your Stock
For your business inventory management software to be as up-to-date as possible, you don’t want to only rely on yourself, just as you wouldn’t rely solely on your employees. The point is that even with the best software for the job, you should count your inventory by hand to make sure that everything adds up. Just like humans, computers can make mistakes, so why not double-check to make sure they are operating safely?
Various types of audits can be conducted on your stock, some businesses perform them annually. Some organizations conduct year-end physical inventories by counting stocks, recounting them, and spot-checking them to make sure everything adds up. Whichever approach you take, be sure you get the job done.
6. An experienced stock controller may be able to help
Keeping track of your inventory allows you to show what your small business is holding at any given moment and includes everything from raw materials to finished products. A small business inventory management software combined with an experienced stock controller may be beneficial if you have a business that produces items with a variety of parts. They receive deliveries, make sure the goods arrive in the right warehouse, and make sure orders are fulfilled.
7. Keep quality control in mind
Finally, no matter what you sell, you must always ensure that the product looks good, works properly, and does what it is meant to do. In some businesses, quality control is handled by a person, while in others, a team of people checks stock when it is being audited or when it is coming in to make sure it does not contain defects or damage. Your customers will know that you care about what your business produces if your product is of the highest quality.
We hope these seven small business inventory management tips will help you and your small business continue to grow! If you’re interested in making your inventory management even simpler and more effective, checkout Inventooly. It is an ideal solution for your business inventory issues and very easy to use and understand. You will get expert guidance as well on managing your inventory and how inventooly can help.