Stock Taking for Small Businesses, a Simple Step by Step Guide

Stock is usually the most valuable thing a small business owns. For a shop, a pharmacy or a supermarket, it can be worth more than everything in the bank. Yet the figure describing it is often a guess.

Stock taking is how you replace the guess with a fact. It is the physical count of everything you have, compared with what your records say you should have.

This guide explains how to do stock taking for a small business, step by step, without closing the shop for a week, and what to do when the numbers do not agree.

What stock taking is, and why it matters

A stock take answers one question: is what is on the shelf the same as what the record says?

When the two agree, you can trust your profit figure, your reorder decisions and your staff. When they do not, the difference is money, either lost, stolen, damaged, expired or simply not recorded.

A regular stock take helps you:

• Know your real profit, because cost of goods depends on stock.
• Spot theft and leakage early, while the trail is fresh.
• Find slow-moving and expired stock before it becomes a total loss.
• Reorder with confidence instead of buying "just in case."

How often should you take stock?

It depends on what you sell and how fast it moves.

• Full stock take: at least once a year, and ideally every quarter for most shops.
• Monthly: for fast-moving or high-value goods, such as phones, drugs or provisions.
• Weekly spot checks: on the twenty or thirty items that cause the most trouble or carry the most value.

Many businesses combine the two. A full count every quarter, with small weekly counts of the risky items in between. This is often called cycle counting, and it catches problems far sooner than an annual count.

Before you count

Most stock take mistakes happen before anyone picks up a clipboard.

1. Choose the time. Count before opening, after closing or on a quiet day. Counting while selling is how items get missed or counted twice.
2. Record all pending movements first. Enter every sale, delivery and return up to the moment you start, so the record is complete.
3. Tidy the shelves. Put like items together and move anything in the wrong place back where it belongs.
4. Separate damaged and expired goods and count them on their own list.
5. Print or prepare a count sheet listing every product, with a blank space for the counted quantity. Do not put the expected quantity on the sheet. People tend to find the number they expect to see.
6. Assign areas to each counter, so every shelf is counted once and only once.

How to take stock, step by step

1. Count one area at a time, left to right and top to bottom, so nothing is skipped.
2. Count in units you actually sell. If you sell single sachets, count sachets, not cartons. Open cartons count as loose units.
3. Mark each shelf as done with a sticker or chalk, so it is not counted again.
4. Use two people for high-value items. One counts, one writes, then swap and count again.
5. Do not move stock during the count. If a delivery arrives, keep it aside until you finish.
6. Write clearly and sign each sheet, so you know who counted what.
7. Recount anything that looks wrong before you compare with the record.

Compare the count with your records

Once the counting is done, put the counted figure next to the recorded figure for every item.

• Where they match, move on.
• Where they differ by a small amount on a cheap item, note it.
• Where they differ on a valuable item, or by a lot, recount before you accept the difference.

Then work out the value of the differences, not just the quantity. Ten missing sweets and ten missing phones are both "ten," but they are very different problems.

Common reasons stock does not add up

Before you blame anyone, check the ordinary causes.

• Sales not recorded, especially quick cash sales during busy periods.
• Deliveries not recorded, or recorded with the wrong quantity.
• Returns and exchanges that were handled at the counter but never entered.
• Wrong item selected at sale, so one product shows a surplus and a similar one shows a shortage.
• Damaged, expired or used items thrown away or used in the shop without a record.
• Stock moved between branches without paperwork.
• Theft, by staff or customers.

A useful sign: if one product is short and a similar product is over by the same amount, it is almost always a recording mistake, not theft.

After the stock take

1. Adjust your records to the counted figure, with a note of the reason for each difference.
2. Write off damaged and expired stock properly, so it stops inflating your stock value.
3. Look for patterns. The same product short every month, or one branch always worse than the others, tells you where to look.
4. Fix the cause, whether that is a missing step at receiving, a cashier who needs training or a shelf that needs watching.
5. Plan the next count before you forget how this one went.

Make the next stock take easier

The best way to make stock taking easy is to keep the record accurate in between. When every sale, delivery, return and transfer between branches updates your stock as it happens, the count becomes a check rather than a rescue mission.

Keeping stock records with Niimbu

In Niimbu, stock is kept per branch and updated by every sale, delivery and transfer. Low-stock alerts tell you when an item reaches the level you set, and serial-numbered items such as phones can be tracked unit by unit. When a count disagrees with the record, you make an adjustment at the branch with a reason, and every movement before it is on the trail, so you can trace where the difference came from instead of just overwriting it.

Stock tracking comes with the Growth and Scale plans.

See how the stock management app works, how supplier deliveries go straight into stock, or read the inventory management software overview.