top of page

Best Practices for Inventory Management for A Small Business

If you’ve ever had to tell a customer that you’re out of stock, then you know how important Inventory management is to a product-based business. Good inventory management ensures that you have a balance of products available to meet your customer demands without over ordering and having the extra cost associated with excess stock. These costs can include storage or shelf space as well as the cost of purchasing items that you are unable to sell. This blog shares effective ways for small businesses to manage their inventory including stock levels, ordering, and automation strategies.

Inventory Management for A Small Business

Managing Stock Levels

As mentioned earlier, balancing stock on hand with customer demand is important. This means you will need to do some research. Analyze historical product sales, be sure to check whether there are trends that occur at certain times of year. For example, many businesses have peaks in sales during the Christmas season. Some businesses have spikes during spring break, others during the summer season. If you’re a new business, although you may not have historical data, you can conduct research to find historical sales data for your industry. Once you collect sales data, use it to anticipate future sales and the amount of inventory you’ll need in stock to meet customer demand. Factoring in extra inventory as a buffer is highly recommended. This will prepare you for unexpected increases in sales or potential shipping delays when you need to restock.

Ordering Inventory

InventoryManagement Reordering

In addition to ordering inventory ahead of time to store on shelves, consider a just-in-time ordering approach when appropriate. While it may not be appropriate at all times, this approach can be useful for items that move fast and are easy to restock. Just-in-time ordering allows you to order products exactly when they are needed, which helps reduce the risks of over ordering and expense of storage. Drop shipping is another option to consider. When customers order from your website or ecommerce platform, their orders are automatically sent directly to your suppler for fulfillment. Drop shipping is a way to reduce the amount of storage space you need. It also minimizes your financial risk because you don’t have to purchase inventory upfront. If you choose to dropship, be careful to vet your suppliers. You’ll want to find reliable suppliers to ensure you get high quality products and on-time delivery. For a seamless process, implement your dropship provider with your website or ecommerce platform. This eliminates manual work and reduces the risk of human error.

Automating Inventory Management

If barcode scanning is an option for your business, use it. This also reduces human errors, automates inventory updates, and can speed up your customer check-out process. Audit your inventory periodically to check accuracy, especially after a large sales season. If you find any discrepancies, trace where errors occurred and implement processes to prevent them from happening in the future. Use inventory management software to run reports on stock levels and sales. Use data from your reports to make current and future decisions about sales and purchasing.

There are many steps that you can take to optimize your inventory control and track relevant data. Implementing some of the strategies in this blog will help manage your stock levels, order efficiently, and automate processes to reduce human error and increase accuracy. Good inventory management will help you with meeting your clients’ demands, which will increase sales and business growth.


Katrinka Duckworth is a Small Business Coach, Founder of Harmon Business Consulting. She has over 15 years of experience helping small businesses develop systems and processes to increase sales. To work with Katrinka, you can book a free consultation using her booking calendar HERE or by sending her an email at

2 views0 comments


bottom of page