4 must-dos to maximize your inventory spend and space
Your handcrafted products are a hit. Orders are flying in from your website, your online store and your friends and family, and you just reserved a space at a huge craft show.
You're thrilled that business is booming. But before long, a wave of concerns is flooding your mind.
Do I have enough material to fulfill my orders?
Do I have the space to store more inventory?
Will I be able to meet my deadlines?
If you can't answer these questions, it's time to take stock of your inventory — and how you manage it. Here are four must-dos that will help you turn your inventory into a steady source of income.
1. Predict the future (of your orders).
One of the keys to good inventory management is planning ahead, says Tim King, president and owner of B. A. Heskett Inc., a manufacturer's representative for horticultural supplies.
"You can't sell goods from an empty wagon," King says. That's why it's important to have sales projections, which he says are the backbone of any business plan. "All the costs involved with selling a product – from production and packaging to marketing and shipping – have to be built into the price."
To project future orders, look at what you've sold in the past. If you've sold 25 crocheted scarves each month for the past six months, for example, it's likely you'll need to make at least 25 this month. Then account for any upticks in seasonal demand by looking at monthly and year-over-year sales trends.
"Be sure to stock up on supplies to meet increased demand during holidays, promotions and other peak ordering times," King says.
2. Implement an inventory management system.
A reliable tracking system can do wonders for your efficiency, flexibility and profit margins. Whether you make a handful of products or hundreds each month, there are plenty of inventory management options out there, including:
- Accounting software such as QuickBooks, Zoho Books or the Mac-friendly Xero. Use these products to track your inventory and even get a dollar value for it.
- Cloud-based inventory-management systems that are tailor-made for makers, including Stitch Labs and Craftybase. Equipped with bookkeeping and inventory tools, both systems allow you to track your creative products at different stores and selling locations.
Spreadsheet savvy? You'll find all sorts of free Microsoft Excel templates online. Color-coding the columns makes it easy to spot out-of-stock items and special order requirements.
For more inventory tracking options, check out the "Top Inventory Management Software Products" list from Capterra, a software research tool for businesses.
3. Create a home for everything.
With orders flying in and out, efficiency can be a maker's greatest asset. Designer and Master Tailor Jean Salata recommends arranging your workshop "so that everything flows to your benefit."
The Ohio entrepreneur, who works from her home, believes that developing a storage system that works for you is essential. "I have my inventory on shelving, with supplies stored in clear, labeled plastic boxes and placed in order based on how frequently I use them," Salata explains. "Then I can pick out supplies and threads without having to look around for them."
The seamstress and pattern maker also suggests organizing your tools in groups. "I have all my scissors in one section, pliers in another and so on," she says. "I always put them back in the same order when I'm finished."
Having a designated home for everything in your workspace reduces clutter and increases productivity. Being organized also makes it much easier to keep accurate supply and product counts.
4. Educate yourself.
Creative professionals such as Salata realize that being an entrepreneur requires a diverse skill set.
"Knowing your craft alone does not make a successful business," Salata says. "Educate yourself with tutorial videos on record keeping and project tracking. Knowing how to do them is just as important as knowing your craft."
Here are a few resources that can help you do just that:
- Discover an assortment of apps that can help you with everything from managing inventory to prepping orders for shipping with "50 apps to manage and grow your Etsy business."
- Learn best practices for getting the most from your creative business, from accounting to forecasting at www.CraftProfessional.com.
- Download this free, 40-page guide from Format Magazine for tips about inventory planning as well as pricing, invoicing, taxes and customer service.
Whether it's done with the latest software or a single spreadsheet, managing your inventory takes planning, organization and education. However, with the right systems in place, you'll save yourself a lot of stress, while making space for your business to thrive.
Key tips and takeaways
- Assess your order history and past sale trends to project future orders and supply needs.
- Research different types of inventory management systems – and choose one that's right that's right for your business.
- Get organized! Eliminate clutter in your workspace and make sure every item has a designated home.
- Use online business resources to stay updated on the latest best practices for inventory management and general operations.