Most businesses are started by a single person in their garage or basement, and usually the company is much too small to hire employees off the bat. This means that the owner is the only person at the helm of the business in its earliest stages, and often times they have little or no experience with the concept of running their own business. Though nearly all millionaires and billionaires start off on their own with only a few thousand dollars in their checking account, it doesn’t mean that having some extra knowledge will stop you from succeeding. In fact, most business owners who find success get help along the way because learning what you need to get ahead is vital to the growth of your company.
One of the biggest areas that young entrepreneurs often overlook is the importance of keeping accurate inventory records and using analytics to help you predict sales patterns and reordering schedules. It can be difficult to understand why inventory is crucial for business success, but the bottom line is that without a good grip on what you have in stock it’s tough to know what is selling well and what is gathering dust. In this article, we’ll discuss some of the reasons that good inventory practices are so important; especially at the earliest stages of your business’ life.
The ability to analyze which products sell quickly and which ones don’t sell at all is crucial if you want to maximize profits. Many companies are moving to mobile cash register systems like Square Register that allow owners and managers to track their sales and inventory numbers in real-time which can be incredibly useful as your business grows. For instance, if you sell cheap wedding sparklers as well as premium wedding sparklers, you can see which ones sell better and which ones are making you the highest profit margins. Every single square foot of your store’s shelving is very valuable and should be used to its fullest extent. By keeping good records of your inventory and sales numbers, you can ensure that you are only stocking items that have a high probability of making you sales and earning revenue.
Without keeping accurate counts of your inventory items, it is virtually impossible to calculate things such as shrinkage and theft. Having items that disappear from your shelves can quickly run a company straight into bankruptcy, so knowing that there is a problem as far in advance as possible is very important. Keeping tabs on your back stock is the most important of your entire inventory because employee theft typically accounts for over half of all theft in a retail environment. Though you probably want to think highly of your employees, allowing employee theft will quickly eat up your profits.
One of the biggest reasons you need to keep accurate inventory numbers is to know the value of your business. There are several times when knowing the total value of all your goods is necessary, and often times you need to know the value down to the exact penny. For instance, if you want to insure your business and all the goods it owns, most insurance companies will want you to keep detailed records and store backup copies off-site in case of a disaster. Additionally, you may want to sell your business someday at which point knowing the value will also be very important. Regardless of why you need to know the value of your business, it is impossible to do if you don’t keep accurate inventory records.