Managing inventory and orders within your business is a crucial part of running a successful organization. For small businesses, keeping track of where your inventory goes can be the factor that makes the difference between a thriving brand, and a company that loses the loyalty and trust of its customers thanks to delayed orders, lost products, and bad customer service.
Inventory management isn’t just important in looking after your customers either – it’s an essential part of determining how and where you get the profits that keep your business running. Manage your inventory properly and you can maximize your sales, sending your company success into overdrive.
Tip 1: Track What You Sell, and Who You Sell It To
First of all, some of the most important information you’ll ever get out of managing your inventory, is data on which products are moving, and where they’re moving to. The more you sell, the more you should be able to find out about your target market, your biggest customers, and the products that are most popular within your inventory. Ask yourself:
- Which products are achieving the highest sales?
- How many repeat customers do we have?
- Which months are the slowest, and which are the most lucrative?
- What kinds of customers are buying the most?
Answering these questions on a regular basis will give you the tools that you need to drive an increase in customer lifetime value, sales, and purchase size. For example, if you find that one product sells best, you can adjust your marketing efforts to focus on that product. On the other hand, if you suffer with low sales during a particular season, you might choose to host sales or promotions at that time.
Tip 2: Create a System for Fulfilling Orders
Once you understand the movements that take place within your inventory, you’ll be able to create a system for processing those orders more effectively. Many companies bypass this step, and fail to implement systems that handle and fulfil orders in a timely and efficient way for their customers. Unfortunately, missing this crucial measure can mean that you end up losing out on valuable repeat customers and sales. It could also mean that you fail to properly document your sales through invoices and spreadsheets.
A typical process should look like this:
- Create a sales order in the order management system
- Check inventory to ensure the product is available
- Pack the order and apply the cost of shipment
- Charge the payment for the order total
- Convert the order into an invoice
Tip 3: Consider Alternative Suppliers
As your business continues to grow, the supplier that you started using originally may no longer offer you the best deals in terms of prices and quantity. In the competitive economic market that businesses must tackle today, alternative suppliers may be eager to earn your business – particularly if you can prove to them that your products are popular or effective, so don’t be afraid to explore your options. Even if you choose to stick with your current suppliers, knowing what is available in terms of price and delivery capabilities can provide you with crucial negotiating power for the future.
Tip 4: Ask Your Bookkeeper
If the above two steps seem like a lot of hard work, it’s because managing your finances and inventory is a highly complex and time-consuming part of running a business. This is one of the many reasons why a lot of small companies choose to outsource the majority of their financial tasks to professional bookkeepers when their orders and business levels begin to grow.
Bookkeepers can provide expert advice from experience on how you can improve your internal measures for inventory management, and use your bookkeeping system to accurately assess and manage the financial aspects of your business. You can even ask your bookkeeper what other clients in the same industry as you are doing to make themselves more successful, then apply that advice to your own processes.
A bookkeeper can also advise you on how to use an inventory-forecasting system to keep track of the products that you sell and the materials you order, while ensuring that your records are up-to-date and appropriate according to your tax needs.