Launching a business is the beginning of financial freedom. You decide how much you earn by how much effort you put in.
That effort can lead to financial loss if you don’t know how to manage your business inventory. You need a strategy—one that helps you save money while you’re earning it.
Using an inventory management strategy reduces the risk of overselling and excess stock. Unsynchronized orders and inventory leads to angry customers and missed opportunities.
You lose money and loyal customers. What’s worse is Marketplaces like Amazon and Walmart+ may suspend your access because of it.
Lower your overhead costs by taking these business inventory management tips into account. Keep reading to learn how to save money and grow your company.
Forcast the Demands of Your Business Inventory
Supply and demand are two things that keep inventory moving. You have to find a balance between the two to meet customer demands and save money.
Finding that balance is forecasting. You keep an adequate amount of stock for weeks and months ahead based on average demand.
Here’s an example:
You run an online shop that averages 200 to 300 sales a month on a variety of products. A smart inventory strategy says to keep at least a 60-day supply of products in stock.
Doing so covers the demand for the current month and offers a cushion for sales and promos. Forecasting isn’t a perfect science, but it helps you get and keep a handle on what you need to have in stock.
Set Minimum Stock Levels
Whether you’re just starting or advanced in business, you need to set minimum stock levels. MSL is the number of products that must stay on hand regardless of demand.
A set minimum stock level saves you money on storage and insurance expenses. This process works to your advantage when you’re a newbie. New owners tend to get overzealous with inventory when they first start.
These expenses grow out of control, and they end up closing shop. If you’re unsure where you start with minimum stock levels, get vendor managed inventory.
They can help set up and manage your inventory levels.
We live in a modern world where technological advances in business simplify its practices. With that said, consider automation.
Automation is software designed to track business sales, shipments, and inventory. When products run low or slow, you get a notification to fix your inventory.
The automation process helps save you from losing money on overstock or the lack thereof. You also preserve finances by not having to hire additional staff to do the job manually.
Use the FIFO Method
FIFO means first-in, first-out. It’s an old strategy that keeps older inventory upfront, so it sells first.
This process works wonders when you’re selling perishable items. You get rid of inventory before it expires, and you don’t lose money. Nonperishable inventory is a risk as well.
Products gather dust the longer they sit on the shelves, risking damage before they’re sold. FIFO prevents loss like this by moving according to stock and expiration dates.
Get Your House in Order
Don’t let mismanaged business inventory cost you your business. Use these simple tips to get things in order and make more money in the process.
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