How to: Manage Inventory If you don't know what's in stock, there could be trouble in store.
By Jan Norman •
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Ruth Kelsey's method of tracking inventory for her giftbasket business, Brittany's Balloons and Gifts, used to beinformal--to say the least. "I was going by sight,"recalls the Lithonia, Georgia, entrepreneur. "Basically, Istored everything in my den and garage, and every so often I wouldcount it all."
As Kelsey's business grew and expanded to include partydecorations, her inventory system became inadequate. "I wouldthink I had 20 baskets left, then I'd go to fill several ordersand find I had only 14," she says. "That would put me ina pinch, especially in my busy seasons." Kelsey is in theprocess of computerizing her inventory, which she expects to giveher a more accurate method of tracking.
Inventory can make up 50 percent or more of a business'scurrent assets, and poor inventory tracking is a major factor inbusiness failure. "You want to make the best use of yourcapital," says Bruce Cohen, managing partner of the Albany,New York, office of accounting firm Coopers & Lybrand LLP.