We work with a wide variety of small business models but, maybe because it is because of our location in California, we find that we bring in a lot of food and beverage manufacturers and inventory clients. Different natural foods businesses, small retailers, and wineries thrive on the lush Central Coast.
We love to see these clients and help their businesses grow! But, we also see them run into problems of inventory management time and time again.
Being a business owner can be a lot to handle already and when you add inventory into the mix this already time intensive job gets all the more difficult to manage.
Over the years we have had to troubleshoot many of the common inventory mistakes and we wanted to pass some of this valuable information on to you!
Count Inventory Regularly, Not Just at the End of the Year
Annual inventory counts will always need to happen in order to gear your business up for tax season. We published a guide earlier about what and how to count in your end of year inventory counts but it is also important to note that the more frequently you count inventory, the less of a headache you have at the end of the year!
Counting inventory regularly doesn’t only streamline that process of the end-of-year tax preparation stage of business maintenance, it also helps with the regular management of your systems.
It helps identify the areas that are working well and those that need improvement. After all, you need accurate numbers so that they can be analyzed and provide good metrics on which you can base purchasing, forecasting, and systems optimization decisions.
Inventory used to be more of a bear before the digital age, and it still isn’t a seamless process, but with the right system in place to track your merchandise it can become a far easier part of your business life. We have a pretty good knowledge of different inventory-management systems so always feel free to reach out to set up an inventory system consulting session.
Automate your efficient inventory system
This point goes a little hand-in-hand with the above suggestion. Once you have a good system set up, it’s time to let the automation run its course! If you run an online retailer you want your website to be automatically synced up with your inventory in order to streamline the ordering process and ensure proper fulfillment.
Efficient inventory systems also should be doing the heavy financial lifting for you. Understanding your product costs shouldn’t be a mystery. For your business to be great, you need to leverage inventory management systems to help you cost your products properly and then apply the accurate costs to your financial statements correctly and timely!
Knowing where your inventory is also shouldn’t be a bear. These days, even small inventory centric businesses have inventory all over the place! Many have goods at Amazon, a warehouse or three, fulfillment centers, and more! These should be easy to manage with a few clicks and should be accurate in real-time (or as close to it as you can afford).
Beyond that, you need to be able to allocate time to the more top-level components of growing a business. You don’t have time to waste on non-automatic human inventory errors!
Track Performance and Understand the Metrics
When we work with inventory clients we make sure that one of our team members is in charge of monitoring that inventory system to avoid any mistakes. They look to make sure that the appropriate SKUs are being used, that the reporting is accurate, and quickly highlight inefficiencies.
You can do this same thing in your own business by making one team member the inventory manager. Give them the responsibility of ensuring that the inventory is being well managed.
You can then use these inventory metrics to ensure that you are offering the right items for sale, have good pricing tactics, and ordering the right amount of goods, leading us to our final piece of advice…
Have The Right Amount of Inventory
This tip is so much easier said than done!
Most commonly, we see our inventory clients hold too much inventory. They think that the more they have, the more they can sell.
This isn’t always the right move. For one, it can hurt your business’ cash flow. Cash flow problems can force businesses (even profitable businesses) to close their operations. If you are holding too much inventory, there is less capital to go around.
The amount of storage you need for a large amount of inventory can also be costly. This means that you need to find that perfect amount of inventory to have on hand to ensure that you can follow through with fulfillment but maintain your cash flow. Through proper inventory management, it is possible to find this perfect level.
Now Grow Your Business!
Proper inventory management is key to a successful business. If you need additional help managing your inventory, partnering with an expert team might be the answer!