As a small business owner, you need to be psychic.
You need to be able to predict when you will run out of a certain product, how long it will take to get back in stock and how much to reorder.
You know that feeling, right?
Controlling your inventory is one of the most important parts of knowing how to manage a small business.
So what does your small business inventory management plan look like?
How do you establish how many of what products to keep on the shelves?
Today you’re going to learn all the answers to those questions.
In this article, you’ll also learn:
- Why spreadsheets and virtual assistants are a waste of time and money.
- How to keep track of inventory with inventory management software.
- The best small business inventory management tips.
But before you take a deep dive into inventory management for small business, what exactly does the phrase mean?
What is inventory management?
Inventory management is organising your products to ensure you have the right quantity on hand at most important times.
It lets keep a close eye on numbers and know exactly how much cash you have sitting on the shelf.
This is integral to the way your business operates. If you know how much stock you have on hand, you’re always aware of the strength of your business.
Good inventory management allows you to:
- Avoid unhappy customers by selling something you don’t actually have in stock.
- Be sure you aren’t holding expired or seasonal products.
- Avoid having cash stuck in items that are hard to sell.
Good inventory management promises that you’ll have the products on hand when they’re in demand.
You may be saying:
“but I do know what products I have. I have my spreadsheets where all the data is accessible whenever I want it”.
But have you ever put a wrong number into a spreadsheet? Or sold a product which you didn’t have in stock?
I bet you have!
And if you haven’t, there’s every chance that it’ll happen to you in the future.
Let’s take a look at some problems that spreadsheets cause:
How to lose money with spreadsheets
It may seem efficient to manage your small business inventory using a spreadsheet.
Having data in a spreadsheet is great for your small business.
Managing your small business inventory in a spreadsheet is not.
Let me explain.
If you rely on spreadsheets too much, you leave yourself open to a wide range of mistakes:
- Spreadsheets can’t be automatically updated
- They’re unable to communicate to your web store or other sales channels
- You need to do the math yourself to see trends and patterns
…and that’s just to name a few.
There’s a better way to manage your inventory than this…
Another massive downside of inventory management using a spreadsheet:
Spreadsheets and handwriting also can’t talk to other systems, like your online store, invoicing methods or POS system.
Good inventory management software for small business avoids these problems.
Why virtual assistants are a waste
Some small business owners use the help of virtual assistants as they’re cheap and good at repetitive tasks.
A virtual assistant is essentially an employee that you pay to do online tasks.
In the world of ecommerce, virtual assistants are regularly used to:
- Fulfil orders
- Write product descriptions
- Create blog articles
- Update your product inventory
Sounds great, right?
Just because a virtual assistant can help you out with your inventory management, doesn’t mean that you should use a virtual assistant.
Virtual assistants can be convenient for saving you time but can cause some incredible headaches
Putting another human into the process, (especially someone you don’t know) is a great way to increase the likelihood of messing up your numbers.
Why pay someone to do that when there’s already software that can automate this process for you?
Why you need small business inventory management software
As you just saw, virtual assistants and spreadsheets can’t manage your data in an efficient way.
Small, very small, medium and huge businesses base everything on numbers, statistics and data because that’s a reliable way to grow.
The accuracy of this data is crucial, regardless of the size of your brand.
Your small business needs reliable, accurate and up-to-date information.
That’s exactly what inventory management software guarantees you.
Here are 5 benefits of using inventory management software for your small business:
1. Small business inventory software grows with your store
Once the addiction of being an online retailer bites you, you’ll soon want to increase your product range.
For example, more variants of current products, new products and even new categories altogether.
Before long, you’ll want to be selling in different currencies and languages.
Reliable small business inventory software that works alongside your ecommerce platform will make all this a breeze.
2. Reliable software makes it easy for you to sell in new markets
Online sellers that sell in more than just 1 channel increase their sales by more than 33%.
So it’s clear that offering your products on more than just one sales channel is a great way to sell more products.
But this does present a few problems.
- You have to manually update your stock numbers in each channel after each sale
- It’s much easier to mix up your data and send the wrong product to the wrong buyer
- It takes a lot of your time to do all this!
Whether you’re a multichannel seller or seller on just one channel, cloud-based inventory management software can help you enter a new market and sell more.
An inventory management system that can automatically sync your inventory into a new sales channel.
Would this make it easier for you to test and enter a new market?
You wouldn’t have to log into your eBay account and your online store each time you had a sale.
A multichannel inventory management system syncs products over multiple channels automatically.
This means that you never have to think about syncing products yourself.
Look at the example below:
Shoplo Multichannel inventory management – manage your inventory now
In the above example, you can see your inventory column shows the number of products you have in stock.
When a sale is made in any channel, numbers update automatically in every other connected channel.
Imagine you sell laptops.
If you sell 1 MacBook Pro on eBay and 2 in your own web store, the stock numbers are automatically updated – from 45 to 42.
This change in stock numbers is reflected in both your eBay store and web store, immediately.
In your eBay store, the number of available MacBooks will change from 45 to 42 even though you sold only 2 MacBooks via eBay, and 1 on your own store.
How does this benefit you?
- No need to manually update products
- Your customer see the true number of products you have ready to be bought
- When you get new stock in, one update to the master inventory is reflected in every sales channel.
No more time lost doing data entry every time you get a sale or receive new stock.
You’ve got more time for you to focus on growing your brand.
This is just a taste of what small business inventory software can do for your brand.
3. Mistakes when fulfilling orders are a thing of the past
Sending the wrong order to the wrong customer is a painful and expensive experience. Plus, it leaves your customer quite unhappy.
An inventory management system that integrates with a fulfilment service is very beneficial to your small business.
When an order is placed in your store, the software will take your customers data and automatically create a shipping label for you.
You can also book a courier to come pick up your delivers from within the software.
No more mixed up orders, no more costly returns. You’ve now got an inventory management platform that helps you fulfil your orders.
4. Inventory tracking software lets you visualise your brand’s performance
The dashboard of your inventory management system gives you a quick overview of the performance of your sales.
You’re able to see your total number of sales, as well as your revenue per sales channel.
But let’s see this theory in practice.
Look at the example below to see how an inventory management tool presents your data to you:
Shoplo Multichannel Inventory management – manage your inventory now
As you can see in the example above, you have instant information about your revenue from all sales channels in the “total” field.
Looking at the trend curve, you can also see your current sales trend projected again the previous time period.
You’re also able to see the sales of a certain channel expressed in a dollar value, or a percentage of your total revenue.
How does this help you?
It gives you a clear picture of:
- Which channels generate the most income
- The channels that move the most numbers of product
- Which channels are generating profits or burning your money.
All this data is presented to you in real time. This means that you stay constantly up-to-date about your inventory numbers, as well as your sales.
5. Manage your small business inventory and store from anywhere
As a small business owner, you’re always on the go. But your productivity shouldn’t have to suffer because of that.
Many cloud-based inventory management software solutions have dedicated mobile apps.
As a seller, you can change order statuses, contact customers and even manage your online store.
You certainly can’t do that managing your inventory in a spreadsheet!
This means that your business doesn’t stop when you’re not in the office.
For example, a customer completes a large first-time order while you’re stuck in traffic.
Now you can contact them immediately and say thanks – don’t forget about the thank you note, either.
Shoplo Mobile App. Small business inventory software on the go
What should I look for in small business inventory software?
If you’re considering using software to manage your inventory (and if you’ve read this far, you probably want to), there are some things to keep an eye out for.
The best small business inventory software should:
- Speed up time-consuming tasks and save your time
- Reduce labour costs and the potential for mistakes
- Increase cash flow and efficiency
- Help you avoid stock problems
- Make it easier for you to perform an inventory audit
- Tie in with retail spaces, online stores and online marketplaces.
Let’s take a look at other ways you can get the most out of an organised inventory:
Inventory management software for small business: Tips & techniques.
Using software to manage your inventory will free up time for you.
In that time, use the following techniques to improve your inventory management processes:
Perform an ABC Inventory analysis
This method, sometimes called a proportional value analysis can save you money.
It allows you to tie up a minimal amount of money in your stock while still being able to keep up with demand.
But what is an ABC inventory analysis?
It is the process of dividing your products into 3 categories to keep up with demand, without tying money up in products that sell slowly.
The method states that this is how you stock your inventory:
|A-type items||Products that make up 70-80% of sales take up 10-20% of space in your inventory.|
|B-type items||Products that make up 15-25% of sales take up 3% of space in your inventory.|
|C-type items||Products that make up 5% of sales take up 50% of space in your inventory.|
A-type items are products that you sell a lot of. They only take up a small amount and therefore must be reordered regularly. This allows you to predict future forecasts with more accuracy
You should keep very low numbers of C-type items on hand. These are products that rarely sell. Consider these items not as ‘how many should we have in stock’ but rather ‘should we have these items in stock at all?’
B-type items benefit from being in the middle. Average amounts of orders and an average number of units on hand.
Many small business inventory software solutions can be used to arrange your stock in this way.
This is a fine example of how online inventory management for small business can not only save you time but also help your cash flow.
Keep your Product feeds updated
A product feed is a file that contains all of your products’ information.
As a small ecommerce business, product feeds are important to you because:
- They help spread your brand’s name in Google Shopping
- They are essential for selling your products on Facebook
- They automatically list your products on price-comparison websites.
Inventory control software generates and exports product feeds to dozens of sales channels.
By using small business inventory management software to manage your product feeds, you ensure that every sales channel is updated with the most recent price and stock numbers.
Use inventory software to monitor trends.
Having the right amount of stock ready to ship during busy times means you can pocket the maximum amount of money.
Being able to predict how many products you will sell in the busy (and not so busy) times is a great asset to your small business.
This is called forecasting and it allows you to make sure that you always have enough products in stock.
Take a look at the following data to see trends and patterns of your sales:
- Historical data
- Habits of a certain type of customer
- Promotional & marketing efforts
- The economy (local, national and global)
- Seasons & holidays
A majority of these things are available at a glance within your inventory management software.
This means you can base your predictions on facts and data, rather than raw speculation.
Don’t sell or advertise out-of-stock products.
If a customer can see a product that they can’t actually buy, they’ll go buy it from your competitor’s store.
Don’t show customers something if you can’t sell it to them then and there.
Inventory management software can be used to alert you when stock levels hit a minimum level.
This means that you have plenty of notice to order new products – you never have to sell a product that you don’t have.
So now you know the benefits of using inventory tracking software, it’s time to discuss how much a product like this will cost you.
Isn’t all this inventory management software really expensive?
Perhaps you’re interested in some inventory control software and want to give it a try.
But you might be wondering:
“Can I even afford it?”
In the past, a lot of inventory management tools have been aimed at warehouses and big brands with hundreds of thousands of products to sell.
You can find many inventory management solutions available at nearly any price point.
Many are designed especially for a small business like yours. Some even have free plans for you to test before committing.
Shoplo Multichannel is one solution that is completely free if you have less than 100 sales per month. See how Multichannel can help you save time and grow your sales (try now).
Today you learned:
- Why spreadsheets and virtual assistants are no good for inventory management
- Why and how an inventory management system can make your life easier
- The best small business inventory management tips
- What to look for when considering inventory management software for small business
Now that you know how to keep track of inventory in your online store, it’s time to start selling efficiently and saving time.
What are some of your favourite inventory management tips?
Let us know in the comments below!