5 Tips For Tracking Inventory
If you make and sell products, you know one of the biggest headaches is managing your business’s inventory. Making sure you have all the right items in stock at the right times can be a full time job on top of running your small business empire. These five tips for tracking inventory will help you ease the stress of managing your product-based business.
Identify your demand highs and lows
Successful female entrepreneurs know that recognizing when their demand will rise and fall is integral to managing a product-based business. Take a look at your past sales and see where you had the most volume in sales. Be sure to order a sufficient amount of inventory well before that peak to ensure you meet demand.
Are your products seasonal? Looking at an item’s performance throughout the whole year as opposed to just that season is one of the best tips for tracking inventory. That sugar cookie candle you feature in fall might have been a big hit for Mother’s Day, too. Your marketing and inventory should be ready to meet the off-season rush.
Use an inventory management software to avoid ordering too much or too little
Have you ever been so excited to see a huge order come through only to realize you only have a few more products in stock? What about piling up boxes on your treadmill because you ran out of room in the stock area of your home business? Ordering too much or too little inventory is one of the easiest ways to waste your time and money when managing your product-based business.
Order too little inventory and your customers will be waiting too long for their purchases. Order too much and you’ll be facing a big loss in your business’s cash flows. Instead of using a basic spreadsheet that you have to have to manually update, an inventory management software can do the heavy lifting for you. You can set alerts for when a stock level is low, manage expiration dates for perishable items, and even access your inventory levels on multiple devices.
Track your inventory with barcodes
As modern female entrepreneurs, we know the value of on-the-go info. Elevate your inventory tracking game by using barcodes or QR codes to help manage your stock. Print out a QR code for each of your products, promo items, and packing supplies. Connect the QR code to your inventory management software and scan the code each time you use an item.
Once your process is in place, you can access your inventory counts any time. Using barcodes helps keep track of your costs as well as your inventory levels, making this one of the hottest tips for tracking inventory.
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Pick the best inventory valuation method for your business
Product-based businesses come in all shapes and sizes. How you assign value to your business’s inventory can affect your bottom line in a big way. FIFO and LIFO are the two main inventory valuation methods.
FIFO is “first in, first out”, meaning that the oldest items will be sold first. For businesses that sell perishable items like baked goods, FIFO is the best way to go as the products made first will want to be shipped out to customers first to avoid the products expiring.
Because prices typically rise over time, FIFO results in a higher net income when it comes time to calculate the costs of your goods sold. However, FIFO can cause a hike in your income tax due to that higher income.
LIFO is “last in, last out”, meaning the newest products made will be recorded in your business’s books as sold first. This kind of inventory valuation method is less common. For product-based businesses with quickly rising material prices, LIFO can mean some big savings when it comes to tax time.
Audit your inventory stock frequently
Taking time to make sure your inventory tracking numbers are accurate is one the top tips for tracking inventory. Whether you manage a team of ten or are a female entrepreneur in charge of their own one-woman show, human error is inevitable and can lead to major frustrations. Once a quarter, do a thorough audit of your inventory to make sure what you have on hand is reflected accurately in your tracking spreadsheet or software.
Put these five tips for tracking inventory into action so you can spend less time stressing and more time growing your small business empire.
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