Why is small business stock control so important? Products and services are at the core of every Australian business, so managing and controlling your stock is vital to the success of your business. Spending a fortune on dashboards, reporting and business analytics is money wasted if on the data being reported on is inaccurate. Businesses need an accurate source of truth from which to make business decisions relating to stock. It makes sense then that stock control should be the focus of your small business ERP software solution.
In this article we take a look at what comprises small business stock control to ensure productivity and profitability within your business, the principles of small business stock control and how to achieve it.
What comprises stock control for small business?
Effective small business stock control means accurately measuring and tracking your inventory. Understanding when to order stock, how much to order and your price points. This can sometimes feel like guess work for small businesses. However, the right software will eliminate the guesswork and allow you to take control of your stock. Let’s take a further look at why small businesses need stock management software.
Having control of your inventory can make or break a small business. Whether it’s stock management for auto spare parts, stock management for pharmacy, stock management for tool stores and everything in between – knowing how to manage your stock is vital.
This means knowing when an item is likely to sell out and when is the best time to restock your best-selling products. How much it costs to store products that aren’t selling and how to avoid over-ordering.
What about manual handling?
While small businesses will look for ways to minimise investments, manually managing inventory is counter-productive. Using spreadsheets cannot keep up with the demand of modern small business stock control and limitations include:
- Significant time and effort to manage
- They are prone to errors and inaccuracies
- They don’t integrate with other systems such as point of sale or accounting
- They don’t give an overview of product performance
Stock ordering plays a crucial part in effective small business stock control and should be pivotal to your small business ERP software, integrated across you business. You need to provide the right stock, for the right customer at the right price and the right time or risk your customers going elsewhere. For some businesses this simply means having full shelves, using minimums and maximums to trigger ordering. Managing these minimums and maximums however can be quite laborious, particularly where there are seasonal trends.
In a min/max setup, you risk being in a position where you have stock sitting on shelves for long periods of time. This can have a major impact upon stock control. The same issue is encountered when managing stock based on a one for one replacement system. Whilst there are some industries that call for this type of stock control, the vast majority will want to maximise cash flow by having only as much stock as is required to suit demand.
Intelligent ordering systems can overcome these issues, by calculating orders based upon actual sales for a given period of time. For greater accuracy, use a minimum 90 day period to establish average daily usage to forecast stock requirements. Depending on your geographic location and ordering habits, ensure that your system accommodates the interval you order in and the transit time from order to shelf. The order forecasting system should be able to calculate orders for any snapshot of your trading period, whether you are ordering for Christmas peak trade, end of financial year or Father’s Day sales.
Of course the ultimate in ordering is a system that takes into account all of these potential ordering methods. Your business may adopt an ordering timetable that requires a combination of all methods of stock control. That flexibility will allow your business to maximise cash flow at low trade periods and end of financial year, whilst boosting shelf levels at busy times.
The easy principles of Small Business Stock Control
No matter your industry, from stock management for paint stores to stock management for landscaping businesses or for pharmacy, the principles for effective small business stock control remain the same. Here’s a quick summary:
Quantities – knowing what stock is ready to be replenished, when to buy it and how much to buy is essential for efficient small business stock control.
Tracking – understanding where your individual stock items are at any given time is crucial to small business stock control and will result in happier customers as you will be less likely to be out of stock of desired items.
Shelf-life – inventory items will vary in value, and certain stocks may be perishable or seasonal, which can influence how you manage it.
Holding costs – take into account the associated costs of holding stock, such as warehousing, insuring and shipping or freight. Work out how much stock you need to hold and don’t hold more than you need to.
Value – work out which stock items make the most gross margin and focus efforts on the sale of these stock items for increased profit.
Best-sellers – know you best-selling stock items and conversely your slow moving stock items to improve your ordering strategy.
How to achieve Small Business Stock Control
So how to you get there as a small business? Investing in the right business management software Australia allows small business to take control of their stock. Business management software Australia is one of the biggest assets for small business.
Let’s take a look at some of the ways business management software Australia enables small business stock control.
Reduce errors – manually tracking data results in human errors such as typos made in data entry. These cause inaccuracies that can impact a business’s bottom line.
Reduce training time – hand-held scanners used for stock-take are not only accurate but easy to use which means minimal training time for staff.
Integrate systems – the right business management software Australia will integrate point of sale, account and inventory giving you a holistic view of your stock allowing you to make more informed business decisions.
Grow with your business – as your business grows you don’t want to outgrow your stock control software solution. You might want to open another store or add new product lines. The right software will enable your business to keep control of your stock as you grow.
Learn more about stock control with ProfiitPlus, our leading software for small business.
For further information on small business stock control get in touch with the Foresiight team on 1800 061 670 or use our simple enquiry form and we’ll be in touch soon.