How to do inventory – Answers for first-time business owners
The importance of knowing how to do inventory
If your business requires you to keep plenty of stock, then it is crucial for you to know how to do inventory. Knowing how to manage stock inventory correctly is something that is necessary for your business’s growth and profitability.
Organizing and tracking your inventory allows you to maintain just the right level of stock on your shelves to fulfill all product orders and prevent delays and back orders. Ultimately, you’ll be able to provide excellent service to your customers and meet their needs on demand, and this is why it is important for all business owners to know how to manage inventory.
If you are new to owning a business, you must have an idea how to do inventory at this point. Otherwise, read on to find out about what you are missing and what you should do to improve your existing system.
Steps on how to do inventory
Inventory management starts as soon as you order products or raw materials from a supplier. It ends when you ship the final products to your customers, except if there is a return, and a good inventory system will keep track of that too.
First, you have to count and label all of your products before selling them. Then, arrange them according to purchase lots, assign prices, and record. You can then track purchase orders, reorder from your suppliers once you think that inventory is running low, and adjust your records to reflect the actual number of your stock.
It is essential to know how to manage stock inventory real-time. Record as soon as you order, make a sale, or return items to avoid lapses in inventory tracking and to identify errors in your supply chain.
How to manage inventory if you’re just starting out?
Now that you know the basic steps on how to do inventory, start setting up your system by doing the following:
- Know what type of inventory management system to use for your business
- Create a way for uniquely naming and counting your products
- Count on-hand items and decide which ones you should order soon
- Determine the value of your inventory
- Identify the products that sell quickly and those that do not
- Assign a minimum limit for each type of product to know when to reorder
- Choose a method for forecasting your inventory
Knowing all these things, will help you determine the current value of your stock and subsequently make decisions for increasing, limiting, or stopping new orders for products. Once you have a clear picture of how to do inventory for your business, you’re now ready to set up an effective stock management system for your business!