As a small business owner, managing your inventory can be a struggle. Inventory shortages mean you can’t meet customer demands, and surplus stock can negatively impact your cash flow, compromising your ability to meet payroll and take care of other expenses.
Finding the right inventory balance will make your job less stressful and your business more profitable. Take control of your inventory and don’t let it manage you.
Inventory Software
Consider investing in high-quality inventory software. Manual inventory management systems are outdated. The right system can make all aspects of your business more productive.
Inventory management software forecasts demand for your products and instantly tracks your current inventory. As a result, you should have the products you need when you need them.
Your finances suffer when your capital is tied up in excess stock that just isn’t moving. You can maximize your profits by tackling these problems with the right software.
Analyze Supply Chains
Maximize your storage without carrying too much or too little of any item. Analyze your vendor supply chain. Some suppliers always have what you need on hand and can get it to you quickly. Others require a longer lead time to get their products to you. You can use this knowledge to keep your inventory at the right level for optimum sales.
First In First Out
FIFO is the basis of effective inventory management. You should strive to move the oldest items out the door first. Organize your shelves so that the newest are in the back and the old inventory is in the front.
Discounting older merchandise works for many businesses, such as car dealers. They routinely lower prices on older models before the new stock comes in. Find a way to move your old inventory and free up capital for new products and expansion.
Emergency Plans
The unexpected will always happen, such as a run on an item, a storage glitch or a cash flow issue. Experts recommend that you have a contingency plan for these common inventory issues.
Have a backup for temporary financial issues so that your business doesn’t grind to a halt. Work out an emergency plan for acquiring the items most in demand, especially seasonal items. Line up alternative suppliers and manufacturers for the products you need. Anticipate these issues so that you can spring into action when they occur.
Inventory management is critical for a successful business. You must respond to changes in the market while moving the products you already have.
Poor inventory management will compromise your cash flow and destroy your bottom line. Invest in the right inventory management software and take these other steps to keep things flowing.