Inventory Management: Finding Balance

How Much Inventory - Complete Controller

Every entrepreneur thinks about optimal inventory, but how exactly does one measure how much stock is available and how much is too much? In any business, having stock is essential and depends on the activities necessary to run it. To grow, any company must first cater to the demand for an item and then begin selling. Many businesses need a specific stock level to keep up with demand. 

Each business is unique; however, some examples can give a better picture of the inventory levels for each sector. Enough inventory allows a business to be cost-effective and efficient because planning out budgets, finances, and expenditures is meaningless if the proper stock is not maintained. Without stock, deliveries cease, which translates to business cessation. Below are some examples of businesses that need to keep stock available, supply without delay, and deliver to demand.CorpNet. Start A New Business Now


If you sell edible products at a restaurant, specific quantities of raw stock and semi-cooked items are essential. For example, a fast-food restaurant with famous burgers must prioritize having a daily stock of buns, sauces, raw veggies, patties, garnishes, etc. This may require the owner to coordinate daily with the bakery, meat market, and vegetable vendor to ensure smooth operations.

If an order of ten burgers is received and you have only six ingredients, the odds are high that the 
customer will not return since their request cannot be fulfilled. Whatever you are selling, it must be enough to meet expected demands.

Retail Stores

Retail stores require significant organization and maintenance when considering their tight inventory control systems and proper handling of items, complete with model numbers and areas designated to rows of stock. For instance, a t-shirt would usually be kept in four regular sizes, ranging from small to extra-large, and in different colors, which means different codes for each combination.

Similarly, shoes would be kept in sizes for men and women ranging from 6.5 to 10 and have codes corresponding to each 
combination of size, color, and style. A balanced stock level is to sell and handle customers to their satisfaction.Complete Controller. America’s Bookkeeping Experts

Pharmacies and Drug Stores

Drug stores often have a particular Point of Sale (POS) software that manages their inventory and stock levels. This software helps them monitor all inventory, especially when controlled and heavily supervised substances are used. When a drugstore is set up, this software is configured with a minimum-level warning system that tells the user what is in stock. 

Costly meds, like cancer treatment prescriptions, are kept in limited stock, while commonly occurring meds, like aspirin or flu-fighters, are stocked in high quantities. Similarly, the pharmaceutical stock should be maintained according to your geographical area and ease of delivery. For example, pharmacies in remote areas might need more stock to 
supply the public if deliveries are inconsistent.

Considerations for Inventory Management

Trends or Seasons

A growing and thriving business must forecast each year’s sales season and prepare for upcoming fluctuations. To better prepare, inventory must accommodate patrons and regular customers. Preparing for influxes can quickly determine what part of the year is most active and which is the slowest.

This will be helpful in the upcoming year to envision cost-effective methods of stocking whatever you are selling and prepare accordingly. For example, retail stores often see higher sales around the holidays. This allows the owner to predict client needs regarding inventory and better calculate cash flow.

Weekends and Weather

Some businesses thrive during the weekend while they are slow on weekdays. This prediction can help business owners arm their stocks before each weekend hits. Restaurants, bars, clubs, and other weekend leisure venues that experience heavy traffic Friday through Sunday are successful if they plan for clients during that time. 

Similarly, some businesses experience more visitors during the summer than in winter months or even close during inclement weather. Businesses must observe and account for fluctuating attendance based on the weather. Thus, a company will often see success if client demands are met. However, if stocks are not leveled according to predictions, business cash flow and reputation will be negatively affected.

Cubicle to Cloud virtual businessConclusion

Understanding the type of business you operate and observing customer trends should help you set your need for available stock accordingly.

LastPass – Family or Org Password VaultAbout Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.ADP. Payroll – HR – Benefits