Inventory comes down to two things: Getting it in on time, and getting it out profitably. Between those two points, a lot can go wrong—which is why so many small business owners ask: Should I manage the process myself? Should I hand it over to staff? Should I even think of automating any of it?
With these questions in mind, we asked Michelle Baker, Senior Marketing Manager at Intuit, Inc if she could share what she knows on the subject. Says Michelle, "there are retailers who probably should do things manually. But for every one of them, there are 10 who really shouldn't."
Ms. Baker's team interviewed literally thousands of small business owners and found that "it's a beast that is not easily tamed. Which is why it's the Number One Lousy Job for Retailers.
The Intuit team then compiled a self-checklist (see below) for small retailers which, says Michelle, "is proving to be the ultimate proof point for Point Of Sale systems. Once small retailers see what they really need to know and do, they generally say, "I give. How much does a POS system cost?"
(Turns out, right now, Intuit is offering $600 worth of POS hardware, free of charge when you buy the software and sign up to take credit cards.)
Are you a candidate for Point of Sale?
Automate your inventory process if you need to:
Assign staff to manage inventory if you:
- Carry multiple item types (color, size, features, etc)
- Speed the process for getting inventory on the floor
- Eliminate pricing mistakes at the register
- Speed check-outs with barcode scanning
- Track your discounts (by item, percentage, sales associate)
- Turn your inventory over seasonally
- Re-order regularly
- Manage Vendor Return Authorizations
- Review reports on inventory profit / loss, vendor performance
- Reduce shrinkage
Plan for regular check-ins to maintain firm control of your stock
- Are willing to train and manage them
- Trust them with your money
- Have the budget to keep them around
- Can provide the tools they need to do their jobs:
- Correct process for receiving inventory
- Vendor lists
- Ongoing updates to quantity on hand
- Sales reporting tools (to spot best- worst-sellers, length of time inventory sits on shelf, etc)
Are okay with "winging it" when it comes to product mix, re-orders and discounts
Go for manual Do-It-Yourself inventory if you:
Thinking about what to do next? Compare costs.
- Usually have little to no inventory on hand
- Carry a limited number of item types, colors, sizes
- Do sales strictly over-the-counter:
- No mobile sales (on the road, at trade shows, flea markets, etc)
- Have slow inventory turnover
If you automate
In 2013, you almost can't run a retail operation without a Point of Sale (POS) system. Caution: Be sure to look for one with strong inventory management (otherwise, you're just paying too much for a cash register).
Start at $1400. Can be as much as $5,000.
Hint: The up-front investment is as individual as the systems themselves.
Look for the solution with the fewest variables. In some cases, you'll pay for hardware, software and merchant processing equipment. Some systems are actually licenses (with a monthly fee).
Comparison Notes: In the world of Point of Sale, a higher price point does not necessarily mean you'll get more. This is really a case of "do your homework."
Good things to ask for:
Will it let you use your existing equipment? That computer, tablet and/or smart phone you already own? They're expensive. Put them to work.
Does it have built-in mobile capabilities? Even if you have a small shop, mobile barcode scanning, inventory updates and credit card processing let you stay in the "front of house." Because when you're busy at the cash register, shoplifters know it.
Are their support guys there when you need them? Nothing like a glitch on a busy Saturday to convince any retailer of the importance of this one.
Set-up time for you, training for you and your staff
The fee varies widely, but unless you're technically inclined, it's worth it.
If you're in the market for POS, check out this savings opportunity. QuickBooks Point of Sale 2013 is currently offering their POS hardware (value $600) for free when you buy the software and sign up to process credit cards.
Bonus feature: Their customer support is FREE (most companies charge for it). The free hardware also includes a free mobile credit card reader that turns your iPhone, iPad or iPad touch and/or Android device into a mobile credit card terminal. Definitely worth looking at. When we called to find out more (877-812-0345), the sales rep was really helpful—but their online application is also very easy if you're ultra-busy (or an insomniac).
If you assign staff
This option may save you on the up-front costs but will cost you over time. You might consider this if you can't absorb up-front costs—but when you remember that the hourly wage for retail employees in the US is $12.72, you may just want to save up and automate.
Hourly wage per employee per hour spent + cost of spreadsheet software
Your time for training + reviewing / assessment of next steps; your employee's time spent off the sales floor
If you do it yourself
If saving money is a top priority for you, this option sounds like a no-brainer. But before you rush forward, clipboard and pencil in hand, consider the "soft costs":
- Time. Every moment you're focused on inventory, you're not selling.
- Errors. You're only human—and you're probably in a hurry.
- Software. Even doing it manually, you still need at least a spreadsheet.
$0 (if you already have spreadsheet software)
Your total number of hours spent on it per month X your hourly rate + 25% for opportunity costs (non-selling time)
In these last two scenarios, many retailers use spreadsheets to manage their inventory. But research shows that an average of 80% of audited spreadsheets have errors. And almost all small retailers who use spreadsheets report that they're not very religious about keeping them up-to-date.
Adds Michelle Baker of Intuit, "Running a small business is all about protecting capital. Every penny depends on the systems you put in place."
Don't we know it.
QuickBooks Point of Sale 2013 gets some great ratings—but of course we always recommend doing a little homework before buying. Right now, Intuit is offering free hardware (worth about $600) when you buy the software and sign up for QuickBooks Point of Sale Payments.
More good news: The reps are both friendly and knowledgeable about the product and the offer. Information on the company's entire range of products is available at Intuitpayments.com/POS. The site also provides extensive information on mobile sales, so it's a great resource.