Small business stock control has changed significantly in recent decades. The days of store owners manually counting and recording stock at the end of each business day or week are long gone so that nowadays we can take a much more sophisticated approach.
Let’s take a look at some of the small business stock control basics.
What is stock?
Also referred to as inventory, stock refers to the items that build up when your business buys product that doesn’t sell immediately. That is, they become “stock items”. What stock looks like a very different depending on your business, some examples are:
- A clothes store purchases a line of the latest seasonal trends for the upcoming holiday period
- A catering business buys ingredients in the morning for an evening function
- A irrigation business buys parts to sell in their retail stores and use on jobs they are contracted for
Why do businesses hold stock?
In an ideal world, businesses hold stock for as short a period as possible. So that as soon as you have bought stock, you sell it on again at a profit. Of course, is doesn’t happen this way and most business owners need to hold more stock than their minimum requirements to allow to an increase in demand and dealing with unhappy customers. Therefore stock control measures need to be put in place.
Holding more stock than your minimal requirements also means that you can:
- Buy in bulk which is often more cost effective
- Have stock items to hand if there are any issues with your supply chain
What is small business stock control?
With the above in mind, what does stock control look like for small business? As a small business, having control of your stock (or inventory) means that at any given point in time, you know how much stock you have, when to order more and at what price.
If you over-order on your stock, you have less cash available to spend in other areas of your business that it may be needed and you increase the risk of carrying stock – such as spoilage and costs associated with storage and transportation.
If you under-order stock you will lose customers who order items that are out of stock as they will simply go to a competitor and may not return to your business.
Taking control of your stock is about striking a balance between over and under-ordering. Ordering the right amount of stock will improve your cashflow, reduce wastage, reduce lost sales and keep your customers happy and loyal.
Essentials of stock control
For any small business there are three key elements that when executed will help you achieve stock control. They are:
- Record your stock
- Know what to order and when
- Reduce costs and plan
Record your stock
Make sure that your stock data is up to date by creating an inventory ledger. In its most basic form an inventory ledger can be an excel spreadsheet but this has it’s limitations and relies on manual entry. The right business management software will automate this for you. An inventory ledger should record information like:
- Date of sale
- Product name and description
- Unit price
- Total paid
Know what to order and when
Knowing what to order and when is essential and automated ordering will do this for you. The right business management software will provide reporting on historical sales to get an insight into demand. For example certain products will sell better at given times. Analysing these trends is one of the best ways to take control and order the stock that you need when you need it.
Reduce costs and plan
Good small business stock control will not only help to ensure that you always have the right products in stock but it will also help to reduce supply chain costs and get the best prices from your suppliers.
Find out more about Foresiight’s leading business management software ProfiitPlus, for small business stock control, simply call us on 1800 061 670 or use our easy contact form to tell us about your business and we’ll be in touch.