Inventory management is essential for your small business’s profitability. But if you’re home-based, you can only use your existing space for your inventory. Your business might be too small for a warehouse but too big for a garage, basement, or attic.
But using your home as a warehouse poses many limitations in your supply chain and overall operations. For one thing, if you live in a rental, you may not have much control over your space, so you have to make do with whatever your tenant has provided. If the storage space is insufficient, you either have to sacrifice some of your personal stuff or find another place. Both are inconvenient. Getting rid of a few of your belongings may affect the quality of your daily life, while the alternative may hurt your pockets.
Plus, business equipment and material aren’t covered by your homeowners’ insurance. If a burglar steals your products or typhoons ravage your home, you won’t receive any coverage for your lost or damaged inventory. Simply put, there’s too much hassle and risk in using your home as a warehouse.
But then again, your business might be too small for an actual warehouse yet. The money you’ll pay will be worthless if you’ll use one-fourth or less of a warehouse’s space. So what are your other options?
1. Determine the Type of Your Inventory
Before making decisions about your inventory, understand what inventory comprises first. There are several types of inventory, but assuming that you’re operating a retail store, you must be dealing with finished products.
Finished products are the items stored in a warehouse until they’re sold or shipped. In a small, home-based retail store, finished products aren’t usually so many that they’d suffocate a space. But once the business grows, it would need more inventory to accommodate its increasing customers. The business may also start enjoying “peak seasons,” which are the periods their sales surge.
To prepare for peak seasons, you must order anticipation inventory or buffer inventory. Anticipation inventory, as the name suggests, is for times when you’re anticipating a jump in sales, such as your peak seasons. Buffer inventory, on the other hand, is sometimes called “safety stock.” They serve as a cushion for when an unexpected issue or need for more inventory arises.
Knowing the exact type of your inventory helps you sort them out accordingly. For example, maybe your finished products inventory have no problem, but your anticipation and buffer inventory have. Thus, you need a separate space for those items, but otherwise, you can keep using your home.
2. Establish an Inventory Management System
Sometimes, inventory problems aren’t caused by lack of space but rather by poor organization. If you often experience lost or damaged items, errors in stock information, shipping delays, etc., re-examine your inventory management system.
If your lists and records are all over the space, that’s a sure sign of poor organization. Moving forward, always receive inventory orders accurately, and track all product information. Keep a record of supplier information, and create a purchase order form, preferably a digital one, to ensure that your inventory documents are in order.
An inexpensive POS system or spreadsheet can help you set up an inventory management system. Just keep it updated, and meticulously check every inventory you receive from your suppliers. Organizing your inventory will make a huge difference in your operations, even if you don’t have a warehouse.
3. Rent a Self-storage Facility
If the best solution to your inventory problems is extra space, renting a warehouse isn’t your only option. You can rent a secure self-storage facility instead, which offers just the right amount of space for your products.
Self-storage units or facilities are typically used by people to move houses but don’t have extra room for the stuff they’re taking out. As such, the space is really designed for homeowners with storage shortages. But even so, they can accommodate small businesses excellently.
Though they’re not as spacious as a warehouse, they can fit basic warehousing equipment like racks or shelves. And speaking of warehousing equipment, it’s important to use those in a self-storage facility because you can’t just leave your items in a box or scattered all over the floor. The environment in a self-storage facility isn’t the same as your home’s, so your inventory may need special care to maintain its quality.
Inventory management isn’t an optional practice for your small business. Even though you don’t deal with a fleet of cargo, you still have a supply chain to run. Without effective and efficient inventory management, you may face many disruptions in your supply chain, leading to poor quality products, disgruntled customers, and ultimately, profit loss. So value your products just as you value your revenue and profit.