THE FIRST TIME I DID inventory for my store, we printed out the 400-page inventory list, put it into binders and whipped out the highlighters. My mom and little brother helped me look for items on the pages. But there was lots of merchandise on those pages that wasn’t physically there, so hunting for it all took us a very long time … one week, in fact. I don’t think we actually finished because I got so frustrated. What was I thinking? Fortunately, I can laugh about it now. And since then, our inventory process became so well-oiled, we got it down to 12 hours.
I know you dread the thought of closing your store for even one day to count animal parts and check expiration dates on all 30-pound bags of dog food, but having an annual inventory — heck, even quarterly spot checks — is of utmost importance to your health as a retailer. Here are some reasons why and how to tackle your inventory, so you never have the same experience as I did so many years ago.
The Benefits of a Physical Inventory
Inventory is your biggest asset, so ensuring its accuracy in your point-of-sale system is critical. Use your POS to help you make smart buying decisions. When the inventory data is off, it results in wasting money, missing sales opportunities, covering up theft issues and so much more. Knowing exactly how much inventory you have on hand is one of the smartest things you can do for your business.
When you have accurate inventory counts, it enables you to have the right balance of inventory. You can catch overstocked slow-sellers and restock on best-sellers quickly. When a POS doesn’t have accurate information, you’re purchasing off of gut instinct, or you’re physically counting merchandise every time … wasting exactly that: time.
Conducting Your Store’s Annual Inventory
The beginning of the new year is the perfect time to conduct your store’s inventory. For tax purposes, you need to report the total inventory on hand at the close of business on Dec. 31. So, executing an inventory on Jan. 1 or soon after is ideal. But if that’s not feasible, just deduct any receiving on or after the first from your inventory total, add back in the inventory you sold after the first, and you’ll have your Dec. 31 number.
As you prepare for physical counting, notify customers that your store will be closed, and get all employees committed to helping. Use barcode scanners, laptops or other technology to speed up the process. Even legal notepads will work for writing things down. Start by counting everything you physically see, working your way, section by section, through the store. This is what you’ll load into your POS. You do not need to print out an encyclopedia of your store’s inventory. All POS systems will show you the discrepancies list once you load the new numbers. At that point you can go searching for missing stock.
Extra Steps
Take this time to look at expiration dates, quality of packaging, consistent pricing and other issues. Remove items from displays, pull the displays out and clean the area. It’s the perfect opportunity to spruce up. Use large boxes or bins to sort items into categories, like expired, missing price, unknown item.
This is going to be a long day, so sprinkle in some fun! Have meals delivered, and healthy snacks and beverages on hand for the team. Listen to music by letting each person play DJ. Rotate each hour or so to keep it interesting.
Spending this little extra time on the dreaded annual inventory day will actually save you money and time in the end.