Thanks to Marcus Lansky, for this guest post.  Marcus is the founder of  Abilitator.biz. Marcus specializes in helping people with disabilities start their own business.  You can reach Marcus at marcus.lansky@abilitator.biz

If you’ve owned a goods-based business for more than two minutes, you know that your success comes down to your sales. Simply put, selling products creates revenue, which is what keeps your business above water and thriving. However, a lot goes behind selling products, and inventory management is perhaps the most critical aspect of yielding consistent sales. 

When you drop the ball on inventory management, it can result in anything from misplaced orders to lost customers. That’s why it’s important to regularly assess your inventory processes and look for ways to improve them. To help your small business flourish, we’ve put together a list of some of the most common inventory management mistakes and how to avoid them.

Not Embracing a Barcode System

One of the most common inventory management mishaps for small business owners is the failure to adopt an automated inventory management system. An automated barcode system can take your inventory management and efficiency to new heights in almost every regard. No matter how proficient they are at their jobs, humans make errors. 

A barcode system will eliminate such errors made in manual data entry, paper-oriented systems, and other human-based tasks. Also, it will make documenting and reporting much more efficient and provide accurate records of all transactions related to your inventory.

Whether you run a produce market or clothing boutique, a quality inventory management system will save you time and money and help you to avoid a number of inventory-related issues. For example, it will help you to minimize dead stock, which refers to items that cannot be sold because they are out of season, worn out, or rendered irrelevant. 

It will also help you to reduce the number of items that expire in the stockroom, such as food or cosmetics. Moreover, an automated inventory management system will help you to forecast future purchases, which can help protect you from having too much back stock and paying unnecessary storage expenses as a result.

Separating Cash Flow from Inventory 

Another mistake that many small business owners often make is keeping the areas of cash flow and inventory management separate. The reality is that the more efficient your inventory management is, the better your cash flow is likely to be. This is because an inventory management system will show you exactly which products you currently have and which ones you need to sell. Also, it will provide you with real-time reports on the types of items you need to restock, what sort of new items to try, and so on. These factors can help you to strategize so that you can optimize your business’s cash flow. 

Using Inadequate Performance Measuring  

Reviewing and analyzing how many of each product you have ordered in the past and which products have sold is paramount to managing your inventory effectively. Understanding such performance, as well as considering market demand, helps you to determine what kind of products to purchase in the future. Many small companies often underestimate the importance of this step and end up making poor decisions when it comes to forecasting. Don’t make this mistake; take your time evaluating inventory levels, customer demand, fill rates, and other essential factors. Being proactive rather than reactive is the only way you will be able to keep up with the rapidly changing marketplace today. 

Inventory management is intimately connected to sales and revenue, and you must do it efficiently to succeed. If you haven’t already, invest in an automated barcode system to streamline processes and minimize errors. Also, keep in mind the relationship between cash flow and inventory management, and be proactive in your performance measuring. You might be surprised by how these tips can help your company flourish. 

Photo by Ashim D’Silva on Unsplash