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 If you stock goods like clothes and electronics, how long is it before they are out of date or replaced by newer designs or models?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First Out’ (FIFO), this means that you always sell older stock first, hopefully preventing loss from products becoming out of date.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.
BizHelp24 – UK business and finance information, news, help and services for small businesses BizHelp24 is a UK business and finance resource providing Small Business Help, Start up Information, news and services; for individuals and Sole Traders. Comprehensively covering a wide range of key business, finance, and service topics. Employment and personal information includes Work Times and Break Entitlement, Body Language, employee Holiday Entitlement and Employment Contracts. Credit Policy information includes Letter of Credit, useful Credit Notes, Business Loans. and Cash Flow Control. Other information areas include Bankruptcy, Homeworking, Business Failure, Company House and Company Names,
The free content within this entire web site is for information only.
The content is believed to be accurate, but only in general terms. Specific advice is needed for individuals & businesses.
ROK Connect Limited (Registered in England No.3573320) t/a
Biz Help 24 is registered with the
Data Protection Act 1998 No.PZ7082780
