How to Manage Your Inventory: 3 Expert Tips for Business Owners

One of the most challenging aspects of running a business that sells products is managing the inventory. You need to make sure you aren’t letting products go stale on the shelf. Products need to be moving out the door, clearing up space for the next round of items to sell.

But what if you are having trouble managing your inventory? It’s important to understand the way items move through your store. Here are ideas for managing your inventory as a business owner.

1. Track what sells

The first step is knowing what sells. Track your inventory regularly to get an idea of what is popular with your customers. You can order more of what moves off the shelves regularly and less of what doesn't sell as well.

Keep track of what happens when you try a new product line. Pay attention to how long it sits on the shelves so that you can gauge the success of the items. There are inventory management apps you can use to help you determine patterns so you are more likely to be successful.

2. Get rid of inventory that doesn’t sell

Not everything you try to sell will be a success for your business, and you may, unfortunately, end up with items sitting on your shelves. If you are stuck with surplus inventory, ways to get rid of it include:

• Bundling surplus inventory with more popular products so that it sells at a discount.
• Giving away items as an incentive for signing up for a program.
• Liquidate inventory or sell items online, even if you don't make a profit.
• Donate and take the tax deduction.

In some cases, you might be better off getting rid of inventory quickly in order to free up valuable space on your shelves to make room for other products. Once you get rid of excess inventory, make use of what you learned from tracking what sells to make better decisions going forward.

3. Try drop-shipping and on-demand

Another way to manage your inventory is to not carry items and focus on drop-shipping. This works well if you are primarily an e-commerce business, and just means that someone else handles the shipping on your behalf when an order is placed. Drop-shipping is one way to ensure that you don’t end up with excess inventory.

A variation of this is an on-demand arrangement. This works well with items that you assemble, or things like books that you can sell online. Rather than maintaining inventory, ordered items are produced when there is demand for them. When I published my book, I chose to use Amazon because of the print-on-demand capability that allows me to have my book published without needing to spend money to buy a number of copies up front. This principle can work with your business as well, if you assemble items by hand or if you plan to sell books.

Carefully think about your inventory needs and look for ways to avoid stockpiling so much inventory that you become inflexible or don’t have room for new items that could be moneymakers. Managing your inventory effectively can mean you stay in business for a long time.