Small Business Inventory Management Tips and Tricks

Published on 5/5/2023

Starting a small business is a pretty impressive feat. There are many factors to consider. As a business grows, many business owners will find it necessary to maintain inventory whether it is in the form of supplies or retail equipment for finished products. If you are organized and diligent then an uncluttered inventory keeps the supply management under control. Maintaining an accurate inventory is critical to the success of a small business.

However, if you have limited capital and space, you need to have products that you can stock and keep track of your inventory as your business grows. We’re looking for smarter ways to make small business inventory management easier. 

These tips and tools are intended for small businesses and can help any overworked owner or manager create a harmonious work environment and manage inventory effectively.

  1. Clear out old, unused inventory.

Step one: Reduce your workload by throwing out what you don’t use. After investing money in your new business venture, you may be afraid to throw something away in case you ever need to use it again. Enough – every penny you spend should be used towards your end goal. If your workspace is cluttered with supplies that you no longer use and products you no longer sell, it’s time to clean it out. If you have office equipment such as a computer that will reduce your taxes make sure your accountant knows what you’re keeping and what you’re throwing. Record inventory adjustments for reasons when you dispose of or donate existing inventory.  This extra step saves you time upfront but reduces the time you spend updating inventory because you don’t have to count items you don’t use.

Follow these two simple rules: 

  • Get rid of anything you haven’t used in six months or sold in a year. 

  • Follow a strict rule... The new product does not arrive until the old product is worn out.

  1. Track best sellers first.

Most small business owners agree with the 80/20 rule. 80 percent of your sales are only 20 percent of your business. This means you will have a few things that are great money makers for you and your small business.

If you’re doing a manual inventory, it’s wise to start with the elements that sell the fastest. Your bestsellers will be sorted faster when you have fresh eyes and match the numbers on the shelf.

Put these bestsellers in the front when you have them. It’s important to keep these best-selling items with you and not at the back of your storage unit. You can set up a bookcase in your office or garage to store these items (if the HOA allows if you work from home). This way you can access them quickly while keeping your office area free of excessive clutter. You also keep them in storage so you can fill them when your office or home supplies are low.

  1. Keep your inventory organized.

Small business inventory management systems don’t have to be complex and inefficient. They should serve you by saving time and thus saving money. For example, an antique shop that sells random items will need a more specialized management platform than a company that sells the same product over and over again.

First make sure you have a system in place to manage your store inventory.

  • It’s easy to find products by category in one place.

  • If you store items in boxes, you can simplify inventory management by placing digital images of items outside the box. Stock keeping unit (SKU) number labels also help you tag and track your inventory.

  1. Separate business and home with a virtual office.

Many small businesses are operating out of home offices and workspaces. However, as your business grows you may be tempted to combine work and home life for leisure or convenience. This mistake can be costly due to the time tax.

Take Martha who runs a soap-making company from her home. She uses her work phone to make personal calls and buy supplies for her business and home. Sometimes she takes soap from stock and uses it at home without tracking it. This combination of capital and inventory can be expensive if it combines the business with personal expenses.

The more you can do to separate your small business inventory and operations from home life the better. But what does this mean from an office perspective?

If you don’t have the budget for an office, you can make your home office more efficient by setting up a virtual office. For a monthly fee you can set up a direct recipient dedicated business phone number to answer corporate business address phone calls for all your mail and pack a personal voicemail box and even a fax number that converts to email. The more you can separate home from business the less likely you will be accused of mixing personal and business funds and referrals.

  1. Find useful inventory management apps.

Not every small business has the money to install expensive warehouse management software. However, there are apps that let you manage your portion digitally without breaking the bank.

Here are some popular inventory management apps:

  • Sortly

  • On Shelf

  • Delivrd

  • Inventory Tracker

  • SOS Inventory

  • Cashier Live

Prices range from free to over $100/month depending on what features you want and how. As your business grows and your needs change you may need to change your inventory management technology.

  1. Move business inventory off-site.

If your office space is filled with too much inventory you won’t be able to get work done efficiently. Moving those items out of the office and into self-storage units is a simpler and often more affordable solution. You might think why not use my garage? Not so fast. Many homeowner associations prohibit residents from using their sheds to store inventory. Although there are no restrictions most people prefer to use their garages to keep their vehicles. Most storage space costs much less than commercial warehouse space. As your business grows you can authorize others to take things from the warehouse without giving them the house keys and you can always move to a larger unit if needed.

  1. Hire outside help as your business grows.

If you sell thousands of items at once and are going through a large moving inventory sometimes it makes sense to hire a third party to keep things organized. It is very important that inventory tracking does not become your full-time job. This way you can spend time on other integral components of growing your business.

Entrepreneurs are tired of trying to manage sales updates of social media platforms filing quarterly tax practices of inventory management and balancing accounts and books. When your business reaches an unexpected phase of growth there is a lot for one person to manage.

Make a list of things you want to keep doing yourself (or things you actually have time to do). Then determine the type of support staff you need to do the rest of the work. Depending on the cash flow you have you can hire part-time or full-time employees or you can hire independent contractors. 

We hope that this article has inspired you to improve your small business inventory management system. Sometimes it just takes a little planning and organization to get started. It’s good to use these habits when starting a business but it doesn’t take long to fix a system that isn’t working for your business.

(This article is a repost from