31.7.2020

How to Simplify Small Business Inventory Management

Written by Austin Chegini

jozsef hocza hwd1q12hzpk unsplash

Almost all businesses have some type of inventory. Whether you stock goods for sale or ingredients to make meals, your store needs to keep track of all supplies. If not, you may become overwhelmed with a surplus of goods, or you might serve spoiled milk to your cafe’s customers!

Much like you need to keep accurate records of all financials, you need to use small business inventory management to keep accurate stock levels. Luckily, technology offers several ways to create a simple inventory system for small businesses.

What is the purpose of inventory management?

Picture this: You visit a large retail store to purchase a shirt. After finding the shirt, you realize they do not have your size. You ask a sales associate if they have your size in stock. Since this store carries thousands of products, its stock room is massive and contains rows and rows of boxes.

With proper inventory management, the worker can quickly see if your size is in stock and will know exactly where to find it. Otherwise, the employee will need to search the entire stock room to determine if the store has the item. One option takes minutes, while the other can take hours. 

Small business inventory management helps entrepreneurs oversee the flow of stock, plan their finances, and build staffing schedules. As a store’s stock room grows and the business expands, proper management will ensure predictable expenses and consistent customer service.

How Epos Now does small business inventory management

The need to keep track of inventory is crucial. It can be a headache to organise your stock room and crunch numbers without the right tools. Some people try to get by with spreadsheets, but this is not a scalable way to keep track of inventory for a small business.

Thankfully, Epos Now created a powerful cloud point of sale system that takes hours of work and turns it into a 10-minute process. Here are some of the ways our electronic POS simplifies inventory management.

Reduces costs

Stores and restaurants that don’t keep an eye on their supplies are often plagued with excess expenses.

For example, a restaurant might need to know how many gallons of milk it uses every week or so. That way, the owner can place routine orders and ensure there is always enough milk in stock. However, not tracking this usage and estimating each order could cause excess ordering. Now, the restaurant is stuck with too much milk that will go off after two weeks. Since there is no way to sell it fast enough, the business will waste money on these purchases.

Another example is a store with a traditional cash register that doesn’t keep a record of the exact items that sell, only their value. If the owner notices boxes of chocolate bars are flying off the shelves, they may order more boxes to satisfy this demand. However, children may be stealing the chocolate, and the traditional cash register is not tracking this theft. The owner is then ordering more candy that will ultimately be stolen, resulting in further unknown costs.

The Epos Now system monitors all inventory, whether it is in a storage room or in a bottle at the bar. Each time a product is sold, the inventory is updated to reflect the most accurate count. Business owners can then identify what is selling, what is in stock, and when to order more.

Prevent shrinkage

Shrinkage is defined as the loss of inventory due to employee theft, shoplifting, administrative error, vendor fraud, damage, and cashier error. For small businesses, this may seem like a small issue, but it is anything but that. In 2017 alone, shrinkage cost the U.S. retail sector $46.8 billion!

An unorganised stock room is a dream for an employee with sticky fingers. While your employees may be honest and trustworthy, nothing is stopping them from sneaking a can of coke or a small item from storage every so often. After a few weeks of these harmless thefts, your business may see some significant losses.

Likewise, an employee can sneak a few pounds from a traditional cash register without anyone noticing. If they do this a few times per week, the employee can sneak in an extra pay check.

With a cloud point of sale system with inventory management features can track exactly what item was purchased, who rang up the transaction, and what payment type was used. If a few pounds go missing, the owner can check the records and see precisely which employee is the likely culprit. Also, the POS shows what inventory is in storage, discouraging employees from snagging anything since it will cause a reporting discrepancy.

Identify and keep up with consumer trends

Whatever service or goods your business offers, you should want to provide what the customers want. Your small business inventory management system should help you identify changes in supply and demand and cater to these needs.

Consider the problem of dead stock. A business that lets inventory levels of a specific item creep up will eventually be faced with the problem of having a stockpile of unwanted goods. Think of the 2017 fidget spinner craze. Every store seemed to have them as people cashed in on the hype. However, the market quickly became saturated and retailers were stuck with massive inventories of the toy. Fewer people wanted these toys, and now owners had to either try selling them at a lower price or liquidating them. Either way, they would realise a loss because the inventory was dead.

For a local mom and pop shop, dead inventory can become a huge expense that can cause severe financial stress. Small business inventory management is key to preventing this type of dead inventory disaster.

The Epos Now system visualises data to show you how your inventory is performing. If certain goods are selling left and right, you can check how much stock you have and place orders ahead of time to keep up with the demand. On the other hand, you can track historical sales and notice downward trends to avoid carrying unwanted goods.

Are you sure your inventory count is accurate?

Epos Now provides hardware and software that can improve your inventory management, simplify your accounting process, improve your customer service, and so much more. There is a reason over 30,000 businesses across the globe choose our system.

Speak with a consultant today to see what Epos Now can do for you.