Learn the ins and outs of inventory management

You'll need to know how and when to order, how to receive items, how to track stock and how to monitor sales and returns. In short, you need to have an inventory management system that can tell you at any given moment what you have on hand, what's arriving and what's going out.

I recommend: For a thorough discussion of the inventory management process, see this article from the U.S. Small Business Association library on Inventory Management. Find a glossary of terms and industry links at InventoryOps.com and review white papers and blogs about inventory management at Supply Chain Knowledge Base.

Know your inventory management needs

An essential element of inventory planning is knowing how much inventory you need and when you need it. It involves forecasting sales before they happen, tracking items that leave and knowing how long it will take to receive new items. A successful inventory management system will have just enough of each item to meet needs at any given time, thus reducing the cost of keeping extra stock or causing delays by running out of items in demand. The Just In Time manufacturing method distills this idea into an inventory management system that industries, such as retailing, have adopted with great success.

I recommend: Find a quick overview of the Just In Time method as well as a list of the major players providing such inventory management systems and services. For assistance with sales forecasting, check out seminars and software from ForecastPro.

Get rid of excess inventory

Keeping too much stock can be a major cash drain. Items sitting for extended periods of time in your warehouse represent idle capital that could be put to more productive use. The key is knowing the minimum amounts your business needs to keep.

I recommend: See this discussion and checklist on reducing inventory. Sign up for email updates containing the latest white papers on inventory reduction.

Get inventory management software

Most of your inventory management and control will be run through an inventory management software system. Your system will need to be flexible enough to meet your specific needs and sophisticated enough to help you control your inventory. But it should also be user-friendly so inventory management software itself doesn't become a roadblock to successful inventory control.

I recommend: For help, see this article on inventory management software as well as this Guide to Inventory Management Software. Some popular business software systems double as inventory management software, including NetSuite and QuickBooks. Smaller businesses may be able to get by using Microsoft Office, which offers a demo and templates for inventory management.  Find more vendors of inventory management software and warehouse management software at Business.com.

Get help with your inventory management system

Modern inventory management is complex but integral to success. Both the basic principles and latest techniques are often offered in seminars and courses through local schools, community colleges or agencies. The SBA and its affiliates can also offer guidance.

I recommend: Check out the offerings at your local community college. Also look for assistance through SBA-affiliated organizations like Small Business Development Centers (SBDC) or Service Corps of Retired Executives (SCORE).