Common mistakes entrepreneurs make in managing their inventory, and how to correct them
As an entrepreneur, taking care of your inventory is probably not the thing that got you into the business or what gets you the most excited to wake up in the morning.
Having a bad inventory system can actually be worse than having no system at all. If you learn not to make a few key mistakes, you will realize that eventually it will be second nature and you will see your profits rise.
Here are a few common mistakes entrepreneurs make in managing their inventory, as well as how to fix and avoid these mistakes.
1. Just plain having too much
The first mistake is having too much inventory. It’s tempting to stock up on all of your products, but warehouse space is not cheap, and the longer a product sits without being sold, the easier it could become damaged or even obsolete. You might have to end up selling it for way less than it is worth or selling it to an overseas liquidator.
To avoid this mistake, figure out your most popular items and always have a lot in the stock of those. Try to project exactly how much you will need for your other products as well, so you can order just how much you need and not have an excess.
2. Incorrectly tracking your inventory
This mistake is so easy to make and could happen at any point. During receiving, order fulfillment, or even employees serving themselves to products. This is one of the worst. You purchased it, but now you can’t find it, causing customers who were told the product was in stock to become frustrated and potentially pushing them to take the rest of their business elsewhere.
Use barcode scanning to avoid human error. Additionally, do a count on at least a couple of items daily, to make sure the amount your system says you have and the amount you actually have a match. Check popular items more often.
3. Not prioritizing
It’s impossible to keep track of absolute everything, especially if you have a lot of product, so choose key things to pay attention to.
Follow the 80/20 rule. 80 percent of your time will be spent on 20 percent of your product. The next products, the one that generates about 30 percent of your sales, should take up another 10 percent of your inventory time, and the last 50 percent the last 10 percent of your time.