Identifying and Solving Inventory Problems at Your Small Business


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Inventory problems can plague small businesses. From higher labor costs to lost customers, poor inventory management is an expensive and inconvenient problem. So, why do so many small businesses put off upgrading their inventory management systems? Forty-three percent of small businesses use manual methods to track their inventory if they track it at all. While many small business owners fear that an inventory management overhaul is too costly and complicated, there are simple things small businesses can do to improve their inventory control.

Common Inventory Problems for Small Businesses

How do you know your small business has inventory problems? If these are recurring issues in your company, your inventory management practices are probably the culprit:

● Mis-picked items

● Lost inventory

● Oversold inventory

● Frequent stockouts

● Obsolete inventory

● Shrinkage

There’s another sign that your company has inventory problems: You’re losing customers. Inventory problems impact customers directly, whether it’s an out-of-stock item, a late delivery, or a backorder. Customers expect a lot from the companies they do business with, and with so many options at their fingertips, they won’t hesitate to go elsewhere when disappointed in a company’s service. One in three Americans will go to a competitor after a single negative experience. That makes fixing inventory problems a top priority if you want to stay in business.

Simple Solutions to Inventory Management Problems

Luckily, solving these problems — or at least significantly reducing them — isn’t cost-prohibitive. There are a few basic elements to a small business inventory management system.


In order to streamline inventory management, businesses need an efficient way to tag items. While there are a few options, including RFID and GPS tags, barcodes are the most versatile solution for small businesses. Barcodes are inexpensive and can be manufactured to withstand a wide range of work environments, including extreme temperatures and caustic chemicals, making them a great choice for managing all kinds of assets.

Barcode Scanners

In addition to the barcodes themselves, barcode scanners are relatively inexpensive. Depending on the software or app you’re using, you may even be able to use existing smartphones and tablets as barcode scanners. Otherwise, there is a wide range of barcode scanner options, including cordless scanners that upload data in real-time.

Inventory Management Software

Software is the piece that ties it all together. Using inventory management software, you can link barcodes to data on each item in your inventory. From there, you can update inventory counts in real-time, set automated re-ordering schedules, and collect data to use for sales forecasting.

The Importance of Regular Stock Counts

These tools alone won’t solve your business’s inventory management problems. While scanning items as they’re processed, moved, and sold allows you to track the regular flow of inventory through your business, it doesn’t solve problems caused by shrinkage or disorganization.

That’s where stock counts come in. Physical inventory counts are a way to ensure that what you have on paper (or in the cloud) matches up with your actual inventory. It allows you to reconcile data discrepancies to avoid stock-outs and identify trends that point to theft or vendor mistakes.

You can perform full inventory counts where you count every item during downtime, but many small businesses find full counts onerous and expensive. That’s especially true if you’re doing them more than once per year — which you should. If full counts aren’t working for your business, try implementing cycle counts. By performing regular counts of subsections of inventory, you can keep tabs on inventory without affecting the flow of your business.

When it comes to inventory problems, small businesses have a lot to lose. Not only are chronic inventory issues expensive to manage, but they also cost you loyal customers. Instead of avoiding change, take the steps to improve your inventory management practices — and your customer satisfaction — today.

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