How Small Retail Businesses Can Effectively Manage Their Inventory

Illustration by Tintu T.J via Dribbble

Inventory management can be a nightmare, particularly for small businesses. In order to transform from small to large, businesses have to take on more stock and increase their sales. However, as most small businesses don’t have enough storage space and manpower, inventory management can be incredibly difficult.

Thankfully, there are many ways that small businesses can effectively manage their inventory and reduce the stress that managing it causes them. Good inventory management reduces costs, helps to forecast demand, and prevents product shortages.

If you are a small business owner struggling with inventory management, then you will find the answers that you need here:


There is a lot of inventory management technology available to businesses. One of the most effective types of inventory technology is the cash register. Not only can cash registers ring up sales, but according to Orga Systems, they can also manage and keep track of inventory for you with point-of-sale software.

Using technology to manage your business’s inventory can be a great way to streamline and automate otherwise complicated processes. Technology will allow you to reduce the number of staff you have managing your business’s inventory physically.

Make sure to read reviews and research software or tech before implementing it into your company’s daily operations.


How Small Retail Businesses Can Effectively Manage Their Inventory
Illustration by Tintu T.J via Dribbble

If you want to make your business’s inventory management easier, then you need to meticulously organise your stock and supplier information. The easiest way to do this is with a point-of-sale system like we mentioned previously.

Point-of-sale software typically has a vendor directory feature, where you can input important information. When you are organising your stock, you should assign specific attributes to each item.

This will make searching for stock much easier, later on. You should include the product’s name; quantity; SKU number; manufacturer’s UPC or EAN code; description; category; MRSP, and colour. In addition, include the vendor or manufacturer’s name, reorder quantities and a picture.


Purchase orders are documents that are created whenever a customer makes a purchase. Purchase orders are a very easy way to manage your inventory. By keeping track of your purchase orders, you will be able to stay on top of how much stock you have for a specific product.

Make sure to update your inventory every single time that a product is sold or returned. By keeping on top of what’s coming in and what’s going, you will have greater control over your inventory. In addition, you will know exactly how much money should be coming in, which is good for tax purposes.

Incoming Stock

You also need to meticulously track inventory orders. These are orders that you submit to your supplier. By tracking and documenting inventory orders, you will ensure that you never receive too little [or too much] stock.

It will also help you to have this information on hand when you are working out the year’s annual revenue. Supplier errors are very common. If you don’t record incoming stock and your supplier has made an error, sooner or later it will be realised but it will probably be too late to do anything by then.

In addition to recording how much stock you have ordered you need to unpack any incoming shipments and organise the products by hand. You must count the products, ensuring that there is the right amount. If there are any shorts or too many items, record this and get in touch with your supplier immediately. Make sure that you store all correct stock properly and tag each one. Labelling inventory is a very important part of inventory management.


If you don’t label your inventory, then it will be hard for your staff to find it when it’s needed. Each item’s label needs to be very clear, detailing the item’s price, its manufacturer, and its product number.

With this information, your staff will be able to record the product’s sale, removing it from your current inventory. If this information is not available then your staff will not be able to find it in your inventory and won’t be able to mark it as sold.

This can lead to fears that items have been stolen when they have been sold. Make sure that you tell your staff to always find a product’s label or ID number before they sell it.


Stockroom Illustration
Illustration by Sarwar Shafi via Dribbble

Keeping your stockroom clean and tidy is a good way to ensure that no products are lost, and to manage your inventory. Make sure that you regularly sweep and clean up your stockroom and keep items alphabetically or numerically ordered.

If you have a warehouse, then you should either signpost specific areas for specific products or introduce a colour scheme. When your stockroom is orderly, you are less likely to lose items. It will make finding products and identifying them much easier for your staff also.

Inventory Counts

You must regularly conduct inventory counts. Most experts recommend doing this twice a week, perhaps more if you hold more stock. This will ensure that no items go missing, and no profit is lost. Inventory counts will allow you to identify problems early, instead of realising when it is too late.

Inventory counts can be very disruptive for staff when working, so it’s a good idea to conduct them after working hours have finished. You could also get your overtime staff [if you have any] to conduct these checks for you on the late shift.

Identifying Discrepancies

If you notice, at any point, that there are any discrepancies or issues with your stock, you need to attend to them immediately. Even small issues with your inventory management can have serious consequences. There’s also always the chance that members of staff are stealing products.

This is a lot more common than it should be. If there is stock missing, call all of your staff into the office and ask them where it is, and then search for it as a team. If you do catch staff taking inventory, you need to fire them and phone the police.

Final Words

If you own a small business, then managing your inventory properly is essential. There are lots of things that you should do to effectively manage your business’s retail. Make sure to follow this guide’s advice. Remember: when your business starts growing, you will need a warehouse to manage your inventory in.

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1 Comment
  1. […] most, you can input an item, how much it’s worth, and how many you have in stock. Then, as you sell more, your POS will update your sales reports alongside stock reports. It really […]

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