How to do a stock take: a guide to taking inventory and stock control
4-minute read
Stock taking and inventory management are key parts of running your small business. You need to be on top of stock control to make sure you’re accurately measuring your efficiency and performance.
But what is a stock take and why is stocktaking an important part of running a shop or warehouse?
What is inventory management?
A stock take, or inventory management, is the process of checking your inventory – how much you have in stock, as well as the condition of goods – and recording the results in a report.
Stocktaking helps with your stock control. For example, if you sell food, you’ll need to know when items are due to reach their sell by date so you can refresh the shelves when necessary.
And if you’re a manufacturing business, a stock take can help you make sure you have all necessary components available to do your work.
Depending on your business model, you may still be able to operate when you’re out of stock of a certain item. This is known as a back order, and is when you accept orders but have temporarily run out of stock in your warehouse.
The types of goods you sell will usually determine how often you should do a stock take. As above, food and drink businesses should check their stock regularly, as their goods are perishable.
But other businesses might choose to do an annual stock take – it depends on the specifics of your business.
A stock take helps you:
- keep track of inventory
- see if your ordering process is efficient
- reduce over-stocking, or stockouts (when you run out of goods to sell)
- know which of your products are selling well
- uncover problems – for example, issues with your supplier, or theft
How to do stocktaking
1. Choose how often to do stocktaking
There’s no getting around the fact that a stock take is time consuming and laborious. You need to dedicate time to the process, which should help you limit distractions and errors.
You’ll need to work out how regularly you’re going to do stocktaking:
- periodically – you might want to do stocktaking every month, quarter or half-year, over a day or two
- annually – this might be a bigger undertaking than a periodic stock take, but an annual stock take could make sense for your business – for example, if you have inexpensive, non-perishable goods
- continuously – this is where you plan for continuous stocktaking depending on the types of items you have in stock, for example you might check some items monthly, others weekly, and some daily – and then update your stocktaking records continuously
2. Print your stock take sheets
Your stock sheets form the basis of your stock take. You use them to record your new count, against what should be there. The stock sheets should use the most up to date records you have.
These should be embedded in your existing stock control system. Many software packages let you print stock sheets in a couple of clicks.
But be sure to use the stock sheets in the right order:
- count what’s on the shelves or in the warehouse first
- then note that down against what your system says should be there
Otherwise, using the sheets as the basis of your count can lead to errors.
3. Organise your stock before the stock take
Make sure you set aside any stock that’s already been sold, but is yet to be delivered or picked up by a customer.
As part of this, you should also pause all purchases and sales, because it’s easier to make an error if you have shifting stock while you’re trying to do your count.
After this, you should start categorising your existing stock. Make sure your stocktaking area is clear and clean to minimise the risk of errors.
Your total stock will likely fall into a number of different categories and it’ll be easier to properly account for everything if you develop a system to start with. This might involve physically moving items around your premises, sorting them into categories, and counting on that basis.
4. Organise staff
If you have staff helping out with your stock take, make sure that they’re properly organised. Once you’ve categorising your stock, you could appoint a separate staff member to each category.
Remember to appoint more staff to larger categories. You should also minimise any distractions – ask employees to switch their phones off and avoid using the radio, for example.
So nobody burns out, you should take breaks during the process. Stocktaking isn’t fun and it’s important to regularly recharge.
5. Stock control doesn’t involve guessing
Accurate stocktaking requires methodical counting – no guessing. Mark items as you go in order to avoid duplicate counting.
Again, you can simplify the process significantly by using logical categories for stock, and by making sure that any sold items have already been removed from the areas being counted.
Plus, remember to simply count items on the shelves first, before using your stock sheet or looking at your stock control system to see what should be there.
6. Validate your stock take
Once your count is finished, you need to validate your stock take. Compare the results of the count to the stock records you printed out earlier. Any inconsistencies should be noted and accounted for – for example, you need a procedure in place for dealing with damaged items.
If you have multiple branches, make sure that you’re properly tracking store transfers, and that purchase orders are being effectively dealt with.
Discrepancies can be serious, so it’s important to investigate their cause. Is an item simply in the wrong place, is there an issue with your supplier, or are there problems with your stock control system in general?
The good news is that a stock take is the first step to solving a problem, so you can make sure that it doesn’t happen again.
7. Update your stock records
Finally, you need to update your stock records with the results of your latest count. If you’re using a software solution to track stock, this should be a simple process. If you’re still using paper-based systems, you could consider moving to a digital alternative.
Best inventory management software
There’s stock take apps that make the inventory management process much easier. Which one you choose will depend on your trade and the size of your business. Take a look below at some of the best inventory management apps to help improve the stock taking process.
Zoho
Zoho is a cloud-based inventory management system which connects to a range of ecommerce platforms to update whenever you make a sale. Not only does Zoho allow you to manage your stock levels through barcode scanning and sales tracking, but you can also enable automatic reordering when you’re running low on certain items.
Prices start from £25 covering two app users for up to 500 orders a month from one warehouse – making it perfect for a small business. It’s also possible to upgrade to larger plans as your business grows.
Zettle
If you run a shop or are selling online, Zettle may be a good option for you as it also works as a point of sale system as well as an inventory management system. Zettle can give you automatic alerts when you’re running low on stock, as well as allowing you to track your sales to work out the popularity of your products.
As Zettle is a point of sale system first and foremost, prices start from 1.75 per cent of every sale made.
Sortly
Designed specifically for small businesses, Sortly allows you to track your stock levels from your phone, tablet, or desktop. As well as tracking inventory, Sortly also allows you to track any assets such as tools and vehicles – making it a perfect stock taking app for construction businesses.
If you’re a sole trader or just starting out, you can join Sortly on a free plan which allows you to track up to 100 items. If you need more than that, small businesses would be best suited to their advanced plan, which costs $29 a month and covers up to 2,000 items and includes unlimited QR labels to help with taking stock.
SKULabs
SKULabs is another inventory management system that also covers order management and catalogue management. It integrates with your various online shopping platforms (such as Amazon, Etsy, and Shopify) so your stock levels are always automatically updated.
You can also print shipping labels and validate your customers’ addresses to help make your ecommerce business run more efficiently.
With so many features, SKULabs is on the pricier end of apps on this list – with the starter plan starting at $299 a month.
Excel
Looking for a free option? Microsoft Excel (or its equivalent) can be a great way for small businesses who are just starting out and looking for a basic option for their inventory management.
Some ideas for columns include:
- item name (or item code)
- quantity
- item price
- description
- expiry date (for perishable items)
Do you have any top tips for stocktaking? Let us know in the comments.
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Written by
Rosanna Parrish
Rosanna Parrish is a Copywriter at Simply Business, specialising in legal and HR content. Trained at London College of Communication, she has been creating content professionally for eight years at publications across the UK and Spain. Starting her career in health insurance, she also worked in education marketing before returning to the insurance world. Rosanna also writes about wellbeing in the workplace. She lives by the sea and does her best writing in coffee shops.
We create this content for general information purposes and it should not be taken as advice. Always take professional advice. Read our full disclaimer
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