You can increase the profitability of your business by 20 to 50 percent only by carefully controlling your inventory. This is one of the cornerstones of competitive business management. So it might be time to migrate from pen and paper, because of small business inventory management in 2020 doesn’t stop at record keeping. It involves sophisticated elements like real-time tracking, small business inventory software, and cloud-based services.
Of course, it’s just lines and figures, addition and subtraction, can’t be so difficult - that’s what some say.
According to Relconsultancy, about $1.1 trillion is tied up in inventory, accounts receivable, and accounts payable? Especially if you’re in the restaurant business where inventory items can be perishable. Hence, the right inventory management advice can be the best restaurant management tip for you.
So you see, there are times the obvious can be quite elusive. Steve Jobs famously said, “Simplicity is the ultimate sophistication.” Hence, your small business inventory management might seem like a simple task to cross off the list with a pen and paper; This approach might be costing your business more than you know.
You might want to ask yourself a few questions to find out how your small business inventory management is as good as you think. Some of these questions include:
- Have you ever lost money due to overstocking?
- When last did your business lose sales revenue due to stock shortages?
- Have you ever understocked any product at the wrong time?
Today’s article tackles inventory management and small business inventory management software that could make all the difference for your business. By the end of this post, you’ll know what to expect from the best inventory management software and how to find the top POS systems for the job. We begin by closely examining the topic.
What is Inventory Management?
There are three pillars of inventory. These are product, quantity, and time. These three pillars combine in the right amount to ensure you get the right proportion to give you inventory management. In a way, inventory management is the art of always maintaining the right quantity of product, at the right time to make sales.
Effective inventory management has several advantages for your business. On a good day, some products will go out of stock, and your small business will need restocking. However, it’s also possible to find your capital locked in excess stock that never sells. Therefore, the challenge is to ensure you always spend the right amount of money on stock and manage storage space always to have maximum space utilization.
What to Expect in a Good Inventory Management Software
Inventory management software is now the go-to solution for most of the problems and challenges facing small businesses. The only thing is, many business owners still don’t take full advantage of these tools. Understandably so, because either they don’t know the full potential of what a small business inventory software can do for them. Or they’ve read a couple of bad reviews online.
Usually, the challenge you will face when choosing any software solution is the impossibility of numerous options the market presents. The following signs should help distill the options and make it less difficult to spot a good small business inventory management solution.
- Enables you to anticipate demand for products
- Allows access to your inventory across multiple devices
- Improve cash flow, reduce costs, and boost the bottom line of your business
- Optimize employee time and the general organization of employee time
- Allows tracking inventory in different warehouses or locations through multi-location management
- Enables painless and quick bar code scanning to speed up checkout and intake
- Prevents production and product shortages
- Tracks inventory items in real-time
Get all this in your small business inventory management software, especially if you’re in the restaurant business.
Best Practices for Small Business Inventory Management
Below are some techniques you should adopt to better manage your inventory in 2020:
Use the First-in-First-Out (FIFO) Approach.
The purchase of goods and their selling should follow the same chronological order as they are created or purchased. Depending on the kind of products you deal with, this will be very important for your business. Ideally, products like makeup, flowers, and food are perishable and must be treated with the utmost care.
For instance, a bar owner must be mindful of the material behind the bar and use the FIFO to bar inventory better. But this doesn’t only apply to non-perishable goods because all products have expiry dates. Therefore, you don’t want any product to sit in storage for too long. Hence using the FIFO method, you have to add new items from the back. Such that older products remain in front.
Tuneup your Forecasting
It’s essential to maintain an accurate forecast for inventory products. You can calculate the number of sales you expect to generate, and depending on factors like precise sales figures. For those who use a restaurant POS system, there is a reporting feature that generates such statistics. You can also base your calculations on predicted growths, promotions, market trends, marketing efforts, and the economy.
Audit your Stock
You still need to audit your stock even with good inventory management software periodically. This practice ensures that what you have matches with your books. Everyone uses a different approach in this case. Some business prefers a more long term method. While others choose a short term approach. Usually, the method you adopt depends on how fast your goods are moving.
Keep Track of Stock Levels Every Time
You need a robust system in place to track the level of your stock. Not all products are the same. Some are more expensive than others. You always want to keep track of the more expensive ones first. Using the right software for your small business inventory management will make all the difference in the world. You will not only have time and money, but your customers’ reviews might give you a better idea.
Remain Mindful of Quality Control
Irrespective of your industry, it’s vital to keep measures in place to help keep your products in the best possible quality. This doesn’t have to be anything complex. You could simply have your employees examine your entire stock during audits. Usually, a checklist to track and note signs of damages and rectify incorrect product labels will do.
Minimize Equipment Repair Times
Machines do fail; it’s part of the price we pay to use them. However, proper asset management is also a crucial aspect of small business inventory management. Because maintenance can be costly. Therefore, you also need to monitor your machinery and equipment. Always make sure they are in good order before and after use. This way, you have a good idea of its life cycle, and you can prepare for any eventualities.
Deploy Cloud-based Inventory Management Software
The ideal software for any inventory management is the kind that offers real-time sales analytics. Sygnio’s restaurant and retail POS systems have direct connections to your point of sale. Therefore, you don’t have to manually adjust your stock level every time you make a sale. The system automatically adjusts items in the inventory. This makes all the difference, especially for business owners who have endless other things calling for their attention every day.
Don’t Forget your ABCs
Many businesses divide the products in their inventory into categories labeled A, B, and C. This helps to maintain tighter control of different products based on their level of priority in the inventory. Apart from the above tip you also want to try the following;
- Consider Hiring a Stock Controller - A stock controller ensures that all products leaving the inventory match the orders made.
- Try drop shipping - Here, you can sell products without stock up yourself. Save you the costs in inventory management and warehousing.
Whether you own a business with a single location or multiple locations, Sygnio’s POS systems should be a great fit. Not only for your small business management but also for your budget. You can check out the pricing offers and let’s know what you think in the comments below.