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Business Operations Resource Center

Inventory Management for Small Business

Inventory must be available when customers need it without consuming more cash, space and attention than the business can support.

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01

Create accurate records

Use consistent item names, units, locations, costs and counts so purchasing and sales data can be trusted.

  • Assign item identifiers
  • Record adjustments
  • Count on a schedule
02

Set replenishment rules

Use demand, supplier lead time, minimum order quantities and desired safety stock to decide when to reorder.

  • Track lead times
  • Review slow moving stock
  • Plan for seasonality
03

Control loss and cash

Monitor damage, theft, expiration, returns, discounts and gross margin by product.

  • Limit access
  • Investigate variances
  • Liquidate obsolete stock responsibly

Frequently Asked Questions

Questions About Inventory Management for Small Business

What is safety stock?

Extra inventory held to reduce the risk of running out during demand or supply uncertainty.

Is more inventory always better?

No. Excess stock ties up cash and can increase storage, damage and obsolescence costs.

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