3 cheap ways to avoid business stock problems


It would be unfortunate if you don’t place enough importance on your business stock. You know well that stock is a current asset. Not only that, if you run or own a small business then stock is your biggest investment.

All that money must be paid attention to. This is through inventory management. A component of invetory management is inventory or stock control. It’s about stock you already have stored somewhere waiting to be finished or sold.

You also, obviously, have to follow other good practices of business stock management. The biggest secret of this activity is keeping your stock levels low. Why? For one, even though inventory is a current asset, it’s not that easy to convert into money. Selling stuff isn’t​ that easy. It also eats up money you could have directed to other business needs and it costs you money to hold stock.

Good idea, good reasons. But forecasting how low to keep stock is another head scratcher for small businesses. What if you overstock expecting demand and it doesn’t happen? What if you’re scared and find you’re out of stock when customers do arrive?

The exercise of controlling stock can aid you with information to better those kinds of decision. ERP software is the go-to tool for this function. But they are not common among small businesses in Kenya. Vendors have not really targeted them.

You can still control your business stock in 3 other cheap ways:

Just In Time

Nairobi estate restaurants are cool. They usually have few people, no instagrammers and give big servings. But at times you may order something on the menu and you’re told they don’t have it or it’s hours away from being ready. These businesses are not evil. They are simply using this “Just-in-Time” method. Other entrepreneurs, like creatives and side-businesses, also use it.

You basically produce or avail what you sell only after a customer has ordered for it. You never ever experience any overstocking problems. Just like our Mheshimiwas have no clue about traffic problems as we clear the roads for them. But it’s not easy to pull off unless your suppliers are also small businesses. It will be too much to expect a supplier to deliver at your whims, or technically your customers’ whims.

ABC analysis

Admit it, you don’t treat all your friends equally. There are a few who you consider to be more friends than the rest – even the though the rest have never really wronged you. Why are you like this? Anyway, you can segment your stock like this too. If you run a supermarket or shop, you have to and you probably do. That’s the ABC analysis.

You have category A stock that’s maybe around 20% of your stock but brings in over 70% of the money. B stock that’s brings around 25% of the money and is around 25% of stock. And C stock that makes up a lot of your stock but brings the least money in total. Segmenting like this helps you prioritize the good stuff. You set aside money to replenish it, you store it in the comfiest spot, you give more time to forecast its future performance, et cetera (okay, okay etc. will do).

Cycle count

Every once in a while, you turn your phone off and undertake your stock taking. The people unable to reach you don’t always understand. But what if you didn’t have to do that kind of, physically straining, hard work? I’m kidding. You’ll still have to do it but way less frequently. Thank the cycle count. You basically count only a small portion of your inventory everyday until you go over all of them. It can be on a really slow day or in the evening as you close.

How? First, you must have accurate records of all your inventory transactions. Remember what we said? If you have received the goods but yet to pay your suppliers you must still record it. Two, you need to have a general list on a spreadsheet, somewhere, listing where all your stuff is stored, what they look like and other attributes you feel is necessary to describe them. Therefore​, when you count your small sample you compare with the facts on records One and Two. If it’s not matching, you have the opportunity to address problems sooner than your competitor who waits for her end-of-the-week or month stock taking. The problem could be poor record keeping, slow moving stock or theft by employees.



About Author


Web Content and stuff. You can reach me you know: editor@herbusiness.co.ke, malitrobert@gmail.com

Comments are closed.