Stock and Range Control in a Shop Business

Last Updated: August 22, 2009

Stock

As part of the managing of your shop, you need to keep stock under effective control. Poorly managed stock can be a huge cost to a business, causing large amounts of money to be effectively thrown away.

Range

Managing and controlling the range of products in your shop is a vital part of stock control.

The range of products you stock is often referred to as the ‘width’ and ‘height’ of your shop, a wide range will have more types of product, but a high range will have more versions of each product (e.g. More makes or brands).

For example, if you sell clothing you need to decide whether it is better to carry lots of different items in a limited range of sizes, or fewer items, but with more sizes to choose from.

The timescale of your stock control is vital; you need to be aware of how long the shelf lives of your products are. If you stock food, how far away is the sell-by date ? If you stock goods like clothes and electronics, how long is it before they are out of date or replaced by newer designs or models ?

The most common method of controlling stock is called ‘First In First Out’ (FIFO), this means that you always sell older stock first, hopefully preventing loss from products becoming out of date.

Monitoring Stock Levels

You should always record the sales and stock levels of your products to help with purchase planning. There are two main ways to monitor stock levels, manually recording each item bought and sold, or using a computer based system to record each item.

“You can record items quickly, simply and cheaply using spreadsheet software such as Microsoft Excel.”

Although most small businesses cannot afford a dedicated system that automatically deducts sold items from stock, you can record items quickly, simply and cheaply each day using a spreadsheet such as Microsoft Excel.

e.g.

Item	Stock	05/08/04		06/08/04		07/08/04
		In	Out	In	Out	In	Out

Product 0001	5	10	1	0	3	0	1
Product 0002	10	10	2	0	5	7	0

By recording your stock every day, you are much better equipped to plan your purchases, as you can see what products are selling, as well what times of the year they sell most.

Stocktaking

Stocktaking is something that you should do at the end of your accounting year. It is where the business checks (and double checks!) the stock levels of every single item over the course of a day. This allows you to find exactly how much stock is remaining, so you can make sure your stock and purchase figures are correct for tax purposes, it also helps you to work out cost and profits exactly.