All small businesses have a small inventory somewhere. They have to store their products somewhere, along with raw materials for their creations. Many small business owners think that this is simply a matter of having a stockroom and buying when necessary. This is a very inefficient approach and can lead to the business bleeding money in the long run. Proper inventory management can help a lot in ensuring company profits, and here is how to do it right.
Secure Your Inventory
Before anything else, you should ensure that your inventory is safe and secure. First, you should protect it from theft by installing security measures. For example, you can contract security professionals to install CCTV cameras near your storage place to keep an eye on the inventory. Combined with limited access, you should be able to stop anyone from stealing your inventory. Besides theft, you also have to protect your inventory from other hazards. This includes natural disasters, fires, and more. Install stable shelving and have a fire alarm installed in the storage room. If your area is prone to flooding, then keeping the inventory above the floor level can be a big help.
Identify The Bestsellers
You must know what stock in your inventory. Stocking too little of a popular product will result in your running out of it. On the other hand, knowing what is not selling also provides you with a good idea of what not to stock. A good approach would be to classify your stock into three types. First, you’ll want to keep on restocking the favorites that sell out quickly. Next, there are the core business products. Finally, there is the stock that doesn’t sell as much.
As a good rule-of-thumb, 80 percent of your sales come from only 20 percent of your stock. Identifying that 20 percent should be a priority. They are the bestsellers, and they need restocking regularly. Core business products are the main offerings but not the bestsellers. For example, if you are a hardware store, you should have hardware equipment and supplies. Stocking them should also be frequent but not as often as the bestsellers. Finally, the slow sellers should only get restocked when the supplies are low.
Process And Track Your Inventory
To find out the rates of sale, it is a good idea to properly catalog the inventory and track it. You should have a proper system of receiving new stocks and releasing stock. This gives you an idea of what is going out and what is coming in. You should tell what was sold and what you have left in the inventory. Additionally, proper tracking will tell you when your stocks are getting low. Don’t just focus on the movement of stock. You should also have complete information on each item in the inventory. Where it came from, when it was received, and more.
All of this sounds complex, and it can be a challenge to do it manually. This is where software can come and help. With modern equipment like bar code scanners and a computer, you can automate a lot of this tracking. It reduces a lot of your work and makes it easier to track things. For example, you can simply look at your real-time inventory records to see stock levels at any time. It also keeps track of customers and suppliers.
Do A Regular Audit
As part of ensuring that inventory is properly stocked, you should perform a physical audit of your inventory. Usually done at the end of the year, you can also do it more frequently. For really popular items, you might want to audit them daily to be sure of the stock levels. The audit ensures that your records match the physical reality of the actual stocks. This can reveal many things depending on the results. For example, if you have furniture for rent, make sure you check the numbers and condition of your items. Offering sofa rentals to ad agencies and film companies could possibly damage your goods, so a regular audit and check would be vital.
Keeping a properly stocked inventory ensures that customers won’t be turned away when they are looking for your products. It can be surprising how this can affect your relationship with customers. If you can meet your customer’s needs, their happiness will carry over to future purchases. On the other hand, if they can’t find the product with you, they will likely take their business somewhere else for good. Taking care of your inventory will ensure that you will have better connections with customers.