Practising proper stock control in a small retail business can add up positively to your monthly balance sheet figures. However, unless you are able to read your customers buying patterns, it is very difficult to really have a good control over what to stock up and when to stock up.
To have overstock items in your shop means you are tying down precious cash flow that is vital to all retail business. You can have 1001 items in your shop, but unless it sells, it is as good as the garbage in the bin. Of course your assets will show you do have that kind of cash value ion your shop, but that does no good for your expenses. Many argues that what they see in their shops are all money. True. Till you dispose of them and till then, it is only money on paper. You certainly cannot carry some of that items and go shopping with it.
Keeping tab on which are the hot selling items during which months in the year is a good way to predict what to stock up. Loosing a sale when a customer comes in and yiou are out of stock on that item is painful for a businessman. There are softwares that can track sales. Looking at the sales data is a good and effective day to do a rough estimate on what to stock up and how much to stock up.
Make a note on the delivery dates of the items that you have placed an order for. For example if you know it takes two weeks for the items to arrive and you can sell 2 tins of milk powder a day, make sure you place the order once you see your stock of milk powder dwindle to about 30 tins. By the time your new stocks arrive you will be just be about sold out.
Always order a little extra till the next shipment just in case there is an unexpected surge in sales for that particular item. So for this scenario, you should be placing an order of about 70 tins. If sales are normal, you have have an excess of 10 tins comes the next order. This time order 60 tins. Again if sales is normal, order another 60 tins for the next order. However, if there is an unexpected surge in sales, and the excess 10 tins got sold, then you should order 70 tins again. Of course this is just an example. Things won’t be that smooth, but that’s the general idea on how not to overstock on items in your shop.