Selling physical products means you’ll need to manage your inventory carefully so you have enough stock on-hand to meet customer demand. In addition, you’ll need to ensure your products are stored responsibly and are able to be distributed quickly.
We’ll explore the steps you can take to streamline your small business inventory management, and how to stockpile your products for maximum efficiency.
Invest in Small Business Inventory Management Software
The most important foundation for good inventory management is the software system you use to add, manage, adjust, and distribute your stock. There are hundreds of inventory management systems out there. To find the right one for your business, it’s important to ask yourself the following questions:
1. Are You Selling Online, Locally, or a Combination of the Two?
Merchants and retailers are increasingly selling across multiple channels—locally, in a traditional retail setup, online via their own website, through third-party marketplaces like Amazon or eBay, and even directly through social media.
It’s important to have a small business inventory management system that centrally tracks all of your stock levels, supplier orders, and customer demands in one place. Look for stock management that integrates with all of your marketplaces and selling channels, at-a-glance insights and easier control.
2. How Complex an Inventory Management System Do You Need?
If you’re a local merchant who sells at local farmer’s markets a few times each week, you don’t need an inventory management system with all the bells and whistles. In contrast, if you have a wide range of products that you’re selling in multiple ways, you’ll need a fully-featured way to manage your stock.
When you’re choosing an inventory management system, think about your short- and medium-term needs. Look at your merchant selling ambitions, how your business is likely to grow, and then choose a software with features and insights to help you meet your goals. Using overly complex software means you’ll spend more time learning and administering the system rather than actually selling items and making a profit.
3. Does Your Inventory Management System Have the Right Level of Automation and Integration?
You will want to make inventory management as seamless and transparent as possible. Two of the most important ways to do this are through automation and integration.
Automating Inventory Management
Look for a system that lets you “set and forget” various areas like minimum and maximum stock levels, reordering quotas, and communications with customers and suppliers. You can periodically review and improve these areas, but automating 80 percent of your inventory management will make you much more efficient.
Integrating Inventory Management
With the wealth of software systems used by merchants and customers, it’s vital that your inventory management can talk to these other platforms. As a local retailer, that means deep integration with your point-of-sale (POS) system, or for online merchants, with your shopping cart software. You will also want a system that can integrate with your suppliers to make reordering easy, and with your distribution for faster fulfillment of customer orders.
How Important is Inventory Trend Management and Forecasting?
Some of the more powerful inventory management systems will provide in-depth analysis of your sales and historic trends, then allow you to forecast how the need for inventory will change. This is clearly very useful for merchants with seasonal cycles, or those seeking to identify in-demand product lines. The depth of reporting and forecasting you need will depend on the size of your operation, but forecasting can help you predict and meet future needs.
It’s important to create a shortlist of needs when looking for the right inventory management software, and try out some free trials to see if they provide the features you need.
Manage the Physical Aspects of Your Inventory
In addition to managing your inventory through software, you will also need to store your inventory somewhere.
Can You Store Inventory in Your Home?
If you run a home-based business, you might be able to store inventory in your house. If you do, consider the following points:
- Do You Need a License from Your City or County to Take Delivery Of, Store, and Distribute Stock?
In residential areas, some commercial activities may not be allowed. Check with your local or county business licensing offices to see if you need a permit.
- Does Your Home Insurance Cover Business Activities and Stock?
Home insurance does not typically cover business activities. Look at extending your homeowner’s insurance or purchasing additional business insurance to protect your business property and inventory.
- What Impact Will Holding Stock in Your Home Have?
Clearly, you’ll need enough space to actually store your inventory—whether that’s a spare bedroom, garage, or other space. In addition, you’ll need to think about how you’re going to receive stock. Do you have an accessible entryway, will the boxes fit through doors in your home, etc.
You’ll also want to look at distribution, for when you send orders to customers. Are you going to arrange pickup with a carrier, or are you going to drop your customer orders off at a local office?
Do You Need Specialist Storage Spaces?
It might not be practical for you to keep inventory at home. If that’s the case you have a couple of options.
- Renting Out a Self-Service Storage Unit
Some storage providers can offer specialist self-storage for holding business items and stock. This can include:
- Climate-controlled storage for specialist inventory.
- Access for commercial delivery vehicles.
- Security monitoring and alarms.
Renting out a business self-storage unit is going to be more expensive than keeping inventory at home, but if you’re managing moderate amounts of stock, it can be a great choice.
- Renting Space in a Warehouse
If you can afford the overhead, and are handling large amounts of inventory, then a warehouse may be the right answer for you. Warehouse services might include:
- Taking delivery of stock on your behalf.
- Storing inventory until it is ordered by a customer.
- Arranging for logistics and distribution.
- Stock monitoring and reordering.
Of all the options, third-party services from a warehouse are going to be the most expensive, but you get a huge amount of convenience.
Whether you go with self-storage or warehouse services, make sure you understand exactly what you’re paying for. Know what’s expected of you, and read through their terms, conditions, and contract in detail so there are no surprises.
Whether you’re taking the first steps in running a retail business, or you’re expanding into new markets, taking the time to set-up your inventory software and storage space now will make your stock management processes much easier down the road.