The Dangers of Not Using an Inventory List for Your Business

September 16, 2022

Did you know that 44% of small businesses don't have an inventory list system?
Running a business can be difficult, especially when cash is tight. Every dollar must be accounted for and spent wisely. You could find your company in a pinch if you're not careful with how you spend your money. Often, businesses fail due to poor money management. Of course, having poor-quality products and services can lead to those same results, but money management ties into that as well.

You must keep track of your inventory and spend wisely. Yet, if you're not using an inventory list, you may be throwing money away and your business into chaos. Keep reading below to find out everything you need to know about using an inventory list.

What Is an Inventory List?

An inventory list has information regarding all the items that you have in stock. This doesn't just include items on the shelves, but also the ones that are being made and individual or raw materials. You'll also be able to track items that are damaged or lost. The list should include the name, a brief description, the cost, and how many you have available.

Why Is It Important?

An inventory list is used to keep track of everything you have in stock and any returns. As a business, you need to have your office, workspace, or warehouse stocked so everything runs smoothly. If you want to continue growing and providing excellent customer service, then a stock list is important.

Inventory Management

How will you know when to order more supplies if you don't know when you're running low? It could be detrimental to your business or company if you aren't prepared. An inventory list will help your company save money and reduce your chances of running out of supplies or items that you may need. You'll be able to run and expand your business because you'll have more data. You'll be able to track your sales; you don't want to list an item on your website as "sold out" if you have a box full of them somewhere. You'll also have more information about product turnover and which products are performing as well as you thought.

Tax Time

This list will also help you during tax time. You'll need to have all the correct information to report so you don't get flagged and possibly fined by the government. By utilizing an inventory stock list, you won't have to scramble at the end of the year when tax season rolls around.

Reduce Shrinkage

If you have perishable items, your inventory list can help you ensure you're sending out the oldest products first before they go bad. If an employee doesn't know which item came in first, you'll likely lose and waste items.

Increase Efficiency

If you're operating in a large warehouse, it can be challenging to find the exact product you're looking for. However, if you have a list of stock, you'll know exactly where it is. You and your employees won't have to waste time searching for items anymore.

Dangers of Not Using an Inventory List

There are many issues that could arise if you don't have an inventory checklist.

Reduce Theft

While you may not want to consider that your employees are stealing from you, it does happen. It actually happens often; between 20% and 40% of employees steal from their employers. By installing a system to keep track of your inventory, you'll reduce the number of thefts. Without a system to help you manage your stock list, the productivity of your staff will decrease. It can take a lot of time to manually enter every time and that also leaves room for human error. Information could be lost or, as we discussed earlier, stolen.

Employees

If your employees are doing work that a system or machine could do, morale and productivity are going to be affected. You could lose hours by not managing inventory levels. Your employees' stress levels will increase, which will lead to them calling out, being less productive, and potentially quitting. Once you've installed a system to help keep track of your stock, you'll realize your employees have a lot more time to focus on other aspects of the business.

Unhappy Customers

Without proper inventory management, you run the risk of decreasing customer satisfaction. When your products are listed as "in-stock" on your website, your customers are going to want to receive their products in a timely manner. Without a list, no one may notice that the product ran out, and therefore the website didn't get updated. That could lead to a delay or possibly having to refund their order, which is a great way to lose money and clients. Keeping a detailed and accurate list will allow you to keep your website updated faster and more efficiently.

Money

You could be spending on products and items that aren't making your business a profit. Overstocking can be costly; you'll spend more money on storage for those items that you may never need. It's normal for you to worry about understocking, too. You don't want to run out, but an inventory list will show you exactly when to order and how much to order based on past data. You'll never be confident in your decisions to restock or terminate a product if you don't have a stock list on hand to help.

Tech Errors

You might have considered using an inventory system in the past but decided not to because technology isn't always reliable. It is possible that some data will get missed or looked over, but it can easily be fixed by doing a physical count. While this may not be ideal, it's less likely that the computer system will make a mistake.

Organization

Another reason to use a list of stock is to keep yourself, your employees, and your warehouse organized. Clutter can happen quickly and your business won't run as smoothly if it's filled to the brim without any system. Your system will have barcodes so you'll know where to put items; you can also set up alerts to help remember when you order products.

Pricing

There are different inventory list options depending on what type of company you own and what products you sell. You'll be able to choose the one that works best for you so you can maximize your profits. If you have multiple warehouses, there's an option for you, and if you're just starting out, you can start small. Prices will vary depending on your needs, but they can range from $40 a month to $8,000 a year.

Other Uses

While inventory lists are used to track items and sales, they can also help you maintain safety in your warehouse. You'll be able to track and keep up with your fire extinguishers and first-aid kits. If your employees are handling heavy equipment, you can keep track of your machinery and its maintenance. This will also help you stay in compliance with OSHA.

Things To Keep in Mind

Even after setting up your business inventory, you'll still need to schedule manual inventory counts. These, as you know, take a lot of time, so you'll need to plan accordingly. Trends and consumer habits can shift quickly, and while inventory lists are helpful and do your business a lot of good, they're not perfect. The stock list can help you predict future trends, but it's not 100% accurate all the time.

When you set up your new system, the hope is that your business will grow. This is a great goal, but it's important to grow at a speed that is manageable. If you expand too fast, you could run into staffing issues. You may also have trouble finding a bigger warehouse.

Inventory List

There are some dangers in not having an inventory list for your business. Yet, it can be difficult to remember all the things your business might need. That is why it might be worthwhile to take the time and make one. If you want to grow and expand your business, you need to keep an inventory list that everyone in your company can use. That way, your employees can always come to consult it. It can also become an important tool within your business moving forward.

It might seem cumbersome, but after you make it, it will save you a lot of time, and worry. If you're interested in growing your company and starting an inventory list, contact us. We've helped many businesses set up their systems and we can help you too.