Optimizing Inventory Management for a Growing Business

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Whether you’re selling a couple of dozen handmade items per month or fulfilling hundreds of orders per week, inventory management is likely a pain point for your business. Poor inventory management practices can seriously impact cash flow, productivity, and customer satisfaction, but doing inventory well is deceptively difficult.

Many new business owners assume that a spreadsheet is all they need for inventory management, only to discover their mistake when their business hits a period of rapid growth. Once a minor administrative task, inventory control becomes a major bottleneck as growing businesses struggle to maintain stock and fulfill orders.

The mistakes that come with poor inventory practices can be avoided by adopting a capable inventory management system before your small business takes off. If you’re the owner of a growing B2B business, these are the inventory management tools you need to keep in mind.

Make Sure You’ve Covered the Basics

Before you commit yourself to growing your business, make sure that you’ve taken care of the basics. After all, you can’t successfully continue to build out if you haven’t addressed some of the less exciting aspects of business ownership. For example, if you haven’t registered your business with the state of Oklahoma, now’s the time to do so. Not only does it allow you to legally operate within the state, but it also provides you with protections and tax advantages that will prove beneficial.

It’s also a good idea to have a thorough understanding of payroll and how that can affect your company. What is payroll? In basic terms, it’s the amount of money you pay to your employees during a specific pay period. Not surprisingly, QuickBooks notes that payroll can be your greatest overhead expense, which is why it’s crucial to have this aspect of your business under control. Learn about the essential steps involved in payroll, and brush up on how hiring contractors is different from hiring employees.

Once you have these steps covered, then you can begin to expand.

Barcodes or QR codes

Adding barcodes or QR codes to inventory drastically reduces the time spent on inventory management. With barcodes or QR codes, you can update inventory counts in real-time as items are sold and perform inventory audits with a fraction of the labor hours. RFID tags are an alternative to barcodes and QR codes, but high up-front costs frequently put them out of reach for many small business owners.


To track inventory with barcodes and QR codes, you need a scanner. While some handheld scanners read barcodes only, others work with both barcodes and QR codes. Look for a cordless scanner that can connect to WiFi to automatically upload inventory data to cloud-based software. If you also need to track item location, buy a scanner with GPS capability.

Cycle Counts

Annual physical inventory counts allow problems to go undetected for months before being resolved. Rather than performing inventory counts once or twice per year, implement a cycle counting system. Cycle counting audits inventory one category at a time in order to complete a full count at least once per quarter. In addition to improving inventory accuracy, cycle counting reduces the labor burden of physical counts.

A Point-of-Sale System

For some small businesses, the point-of-sale system is the final piece of the inventory management puzzle. A POS system is not only a convenient station for checking out customers, but it’s also your mini-HQ. A good POS system includes business tools like time tracking, sales reports, and inventory tracking so the info you need is always at your fingertips.

Cloud-Based Inventory Management Software

Online businesses and businesses that need more inventory management tools than their POS system provides should look into cloud-based inventory management software. Cloud-based software is ideal for inventory management because it updates in real time. That way, you’re not working with outdated counts in between uploads. Some of the features to look for in inventory management software include barcode scanning, automated reordering, robust reporting capabilities, and integration with your POS system of choice.

Very small businesses may be able to get by with an inventory management app rather than full-featured software. Inventory management apps have the benefit of portability, so you can manage and track inventory anywhere and at any time instead of being tied to a computer. Standalone inventory management apps include features like searchable databases, built-in scanners, and support for multiple locations. For business owners who want access to inventory data inside and outside the office, there are also inventory apps that integrate with software.

Effective inventory management starts with the right tools. Rather than allowing inventory management to become a problem, invest in tools and systems that allow you to manage inventory in less time and with less error. While you’ll spend more up front, the gains to productivity and profitability will ensure your business comes out ahead.

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