The importance of stocktaking: 6 reasons why your business needs regular stocktakes
If you’ve been delaying your first stocktake, or are simply wondering if you should bother at all, we hope this article will re-motivate you! Whether your business is small or large, it pays to complete regular stocktakes. Literally.
You will find new ways to increase profits and improve your business. You’ll discover where you’re going wrong and have the opportunity to fix it.
Let us convince you that stocktaking is extremely important.
What is Stocktaking?
Stocktaking involves physically counting all of your stock and matching this up to your stock records to discover any discrepancies. The frequency of stocktake varies between businesses, with some preferring once or twice a year, while others prefer quarterly or monthly counts. If you’re running a retail business, you should do what feels right for you - there is no right or wrong.
Discrepancies between your manual stock count and your electronic records allow you to pick up on a range of issues and put processes into place to ensure better stock control and management. This, of course, will lead to increased profits in the future.
Why is stocktaking important?
As mentioned above, stocktaking highlights stock control issues and areas your business needs to improve on in order to be even more profitable. Here, we’ll list the reasons why every business should complete regular stocktakes.
1. Uncover theft
An unfortunate reality in the retail business is that theft will always affect your stocktake numbers and cause discrepancies. Even more unfortunate is the fact that staff are also to blame for these numbers.
While discrepancies due to theft are a fact of life and you’ll never be able to eradicate shoplifting completely, a stocktake will highlight whether you have a major issue on your hands. It may be the catalyst for a security review and a crackdown on problematic employees. Regular stocktakes alone will also be enough to discourage some employees from stealing.
2. Discover additional stock shrinkage issues
Theft is not the only loss of stock you’ll see. A regular stocktake will also highlight problems with damaged stock, unprocessed or missing orders, and poor stock control practices.
Take this as an opportunity to improve in these areas. For example, if a pallet of stock was damaged due to a leak in your storeroom or warehouse, ensure that it is repaired so this kind of thing doesn’t happen again.
3. Ensure that your business is meeting targets
If you find some major discrepancies in your numbers, you may not be on track with all of your financial goals. It’s better to discover this sooner rather than later and readjust your forecasts while you can.
Trust us, it’s better to fix this now, rather than experiencing a nasty surprise at the end of financial year.
4. Put product performance under the microscope
It’s easy to lose track of which products are winners and which products you could probably do without. Stocktake will put this into focus for you. If you have large numbers of a product that has been on the shelves for months, it’s a good indication that it’s not popular and that you may have to slash prices to move the stock on.
It’s not all bad news, though. You may discover a product that is selling extremely well, which means you can order more of it and even test the waters with related products.
5. Improve your stock ordering process
Following on from the last point - stocktake will highlight any shortages you weren’t aware of and will prompt you to order more. There are things that even good inventory management software can’t always pick up.
For example, you may have had on record that you had a whole pallet of those super popular t-shirts, but stocktake could reveal that a large portion were damaged in transit, or even stolen.
6. Find flaws in your pricing strategies
Nothing puts your finances into the spotlight like a thorough stocktake. This is a great opportunity to analyse your sales and profits and potentially revise any pricing strategies that aren’t generating maximum profit.
Can you think of any other reasons why stocktaking is so important?