A Guide to Effective Inventory Management for Small Businesses

Do you struggle with managing your inventory levels which in turn prevents your business from reaching its full potential?

If so, you are not alone!

Today, I’m collaborating with Ciara Stockeland. Ciara is the author of the book Inventory Genius and her goal is to empower and equip inventory-based business owners with the tools needed for growth and profitability.

Ciara is diving into the essentials of effective inventory management for small businesses, why understanding your inventory is crucial for cash flow and profitability, common mistakes that small business owners make and stressing the importance of having a clear business budget.

The most effective inventory management for small businesses and why it’s crucial for business success

Often times we think of inventory as the beautiful things that we sell.

For example, you sell candles in your shop and that is your inventory, but inventory can also be your raw materials.

So, you have to understand that inventory is directly tied to cash flow and profitability.

If you don’t understand the margins with your inventory, you’ll always be behind the 8 ball with cash management and debt.

Just because you buy something for $5 and sell it for $10 doesn’t mean that you have $5. Because it costs you $1 to turn the lights on, $2 to hire people, $3 for marketing and now you’re already behind.

This is why it’s important to understand that the excess between the sales and the cost of those sales is what keeps your business heart beating. And if you don’t have enough your business will die.

Common mistakes when managing your inventory

Managing your inventory with emotion. Just because I love this product doesn’t mean that everyone else will love it. Your customers tell you what they want with their wallet.

Not understanding or grasping the severity of the importance of focusing on numbers. Even if you are not a numbers person you can be confident in your number. You have to understand what are the core numbers in your business. We call them KPIs, key performance indicators. What are the KPIs that are nonnegotiable in your business. If you want to run a business you need to be the boss of your numbers.

Strategies to optimize your inventory management for small businesses

What does financial freedom look like for you and your business? What does success look like at the end of the journey? And then backing into that and creating a profit road map for how to get there.

Creating a simple business budget that outlines your sales goals, what your product costs you, how much it costs to run, and then what’s left at the end of the day will get your so much further down the road.

How to adapt your inventory strategies with market changes and unexpected disruptions

Simplifying your business offerings. The vast majority of the time we overcomplicate our business model and our customers don’t even know what you sell.

Ask yourself what’s the one thing that you can market, you can advertise, you know exactly who the avatar is, you know what to charge, you know your profit margins on it, and then you just sell the bajeebies out of that. That’s your thing.

Shifting your mindset to see improvement in your inventory management

Stop for a minute and ask yourselves this question – Am I interested or committed to success with my business?

Because everyone is interested in getting rid of debt, making money, taking a paycheck. But the people that follow through and do the work are the ones that are committed, meaning that they will do what is inconvenient.

Commitment means that you’re willing to do what’s inconvenient and confusing perhaps to you in the moment, but you’re going to go all the way with it.

Image is of Ciara Stockeland who was on the She Sells Differently podcast where they talked about inventory management for small businesses and the quote is "I think they need to ask themselves - Am I interested in actually having a profitable business? Am I committed? Or am I just interested because it sounds nice and I'd like that? Because once you answer that question, then it gives you the direction to go."

So, ask yourself are you interested in actually having a profitable business, or are you just interested because it sounds nice and you’d like that?

Because once you answer that question, then it gives you the direction to go.

So, if you are ready to transform inventory management for small businesses, and practices and build a more profitable and sustainable business and want to listen in on my full conversation with Ciara, you can do so here!