If you’re a small business owner, chances are you spend a good amount of time thinking about your inventory.
If you’re not, you should be! Effective inventory management can save your business lots of money, probably in ways you don’t yet realize.
This article describes 5 ways to save money with inventory management than you can implement today.
1. Increase revenue by never being out of stock
Avoiding stockouts is a hugely component of retail. It can be difficult to find the balance between ordering too much and too little, but it’s crucial to running a healthy business.
The costs of a stockout can be devastating in the short and the long-term. Not only do you lose a potential sale in the moment, but stockouts affect the likelihood of that customer buying anything at all (even things that they’ve already put in their basket).
So how do you avoid stockouts? We’re admittedly biased, but this is a huge benefit of using software to automate your inventory management.
If you use Square, PayPal Here, or Clover as your point of sale (POS) system, you have lots of options.
Some of these providers now have inventory management solutions built in. Or, if you want to step it up, try Shopventory’s advanced inventory management solution.
Shopventory will alert you to fast moving products and potential stock-outs before they happen. That means more sales, happier customers and more cash for you.
2. Reduce shoplifting
You might be thinking — how does inventory management reduce shoplifting? Of course you need to have the appropriate security measures in place, but proper inventory management techniques go a long way, too.
Periodically, do a cycle count on popular and expensive items. Compare the amount inventory you have with the amount your inventory management system (software or otherwise) indicates you should have.
If there’s a discrepancy, shoplifting could very well be the cause. Review security footage, talk to your employees, and keep a closer eye on these items until you’ve identified and resolved the cause of the shrinkage.
3. Turn your excess inventory into cash
Imagine you’ve got shelves upon shelves full of obsolete inventory that is just taking up space in a warehouse. In reality, those shelves are not just full of stuff, they are full of money.
Your money. The problem is, the money is tied up because those products just won’t move no matter what kind of clearance prices you’ve slapped on them. Here’s a few ways to transform that inventory back into cash:
- Sell online with sites like eBay, craigslist, or Overstock.com. It depends on your products and the time you want to devote to this, of course, but you can either sell your merchandise individually or in lots. The Internet is a weird place — despite the odds, you might even find someone to buy those 200 “Happy Birthday, Frank!” T-shirts you accidentally printed for a party of 20.
- Sell, give or trade the products to another seller. WHAT? Crazy, right? But hey, maybe you know a fellow business owner or surplus vendor who has the time and patience to deal with this lot better than you can. One seller’s trash is another’s treasure — when you build that positive rapport, you might find yourself coming into treasure occasionally too. Or make a trade. For example, a party rentals company will surely be able to find use for 2,500 wine glasses and you might be able to trade them for any number of things you need, from props to style your product photo shoots to rentals at your next company picnic.
- Make a donation to a local organization, school, library or charity. Get creative, because even misshapen tin cans can be put to good use by a high school art program. Make sure to keep detailed accounting of charitable donations and you’ll come out with a handy tax break come April.
4. Reduce employee theft
Believe it or not, employee theft accounts for 42.7% of inventory shrinkage vs. shoplifting’s 35.6%. According to the National Retail Security Survey, employee theft costs U.S. retailers $16 billion every year.
The New York Times spoke with Richard C. Hollinger, the University of Florida professor that put together the survey. He notes, “Once an employee is hired, they have keys and access codes. They’re very hard to deter and very hard to catch.”
Inventory management can reduce employee theft in the same way it can reduce shoplifting described above. Plus, if your employees know you run a tight ship and keep close tabs on your inventory, they’ll be less likely to develop sticky fingers.
5. Save space by storing inventory at home
The final tip we have is to get creative with where you store your inventory. No need to pay for a warehouse or take up valuable back room space if you have room at home in your garage, attic, or basement.
You can flag which items are stored in different locations in your inventory management software so you know when the store is running low and it’s time to bring an extra box of widgets with you on your morning commute.
We hope you found these tips helpful!
Bach Le is the CTO of Shopventory, which provides advanced inventory management and sales reporting for small businesses.