Inventory management is a crucial piece of a business’s profitability, but a lot of small businesses don’t practice good management when it comes to the items they sell. Some businesses have too little inventory, unable to meet customers’ expectations by supplying enough available products. This often drives customers away, sometimes to another business, and sometimes for good.
On the other hand, many businesses go the other way, overstocking items “just in case.” Though you’ll always have the items your customers are looking for, the risk with this strategy is bleeding money from your business. Excess inventory not only ties up valuable cash flow, but it also costs more to store and track.
Effective inventory management lies somewhere between these two extremes. While it requires more work and planning to achieve an efficient management process, your profits will reflect your effort.
