08 Sep 10

Managing Your Product Inventory

After 5 years of selling, I’ve finally perfected my inventory management in way that works extremely well for me and I’d like to share it with you today.  The key to my inventory management is a spreadsheet that I’ve created to track all the pieces I have available for sale as well as the items I’ve sold.  It’s the lifeline of my business!

Typically, these are the steps I take every time I produce a new product:

  1. Photograph the product and upload the image(s) to my computer.
  2. Create a product tag and affix a small, multi-use label with a unique ID (ie: CRD123, CRD124) and price of the product.
  3. Post the product on my Meylah Storefront (and now with Meylah’s auto-post feature, I don’t have to worry about manually updating my Facebook Fan page and my Twitter because it does it for me).
  4. Upload at least one image of the new product to my Flickr Photostream.
  5. Update my inventory spreadsheet to reflect the new product available for sale.

My inventory spreadsheet keeps me on my toes because it forces good behaviors beyond simply tracking inventory.  I’ve created columns in the spreadsheet to track when I've listed a product online or uploaded an item into Flickr.  The accountability of filling in those cells on my spreadsheet drives consistency within my business.

Once a product is sold, I peel the label off the product tag and I update my spreadsheet using the unique product ID to capture which product was sold as well as the buyer information.

Since I’m responsible for paying sales tax in the state of Washington, I update tax information as well.  Sales tax was a big challenge for me to figure out initially as I began selling online because I wanted to make sure I was accounting for the amount of taxes I owed properly.  My saving grace was when I found on online calculator to de-calculate sales tax.  The calculator allows you to enter the price of your item along with the sales tax due.  Once this information is entered, it calculates the price of the item before sales tax is applied.  For example, if you sell a product for $25 and your sales tax is 9.5%, you can use the calculator to determine your original price is $22.83 and the sales tax amount is $2.17.  This is tremendously helpful when you're unable to charge sales tax on top of your sales price online.

I update all this information in my inventory spreadsheet to give myself a gauge of how much money I owe Uncle Sam, as well as being able to identify where I stand in terms of products sold and my remaining inventory.

The spreadsheet is also extremely helpful because I’m able to easily sort the data and view useful metrics, such as total sales per month, repeat customers, and most frequently sold products.  All of this is helpful for assessing the direction I’d like to take my business in the future.

Please download this FREE spreadsheet from my storefront if you need help managing your inventory.  Adjust it as necessary to suit your needs!  Also, if you have other effective methods for managing your inventory, please share your feedback.  We’d love to know how you track your inventory!

Main image courtesy of: Andy Ciordia


Posted by: Courtney Dirks

Posted in: business management , selling

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20 Comments

1 Beryl Morago commented on 09/08/2010

Thank you so much, the information is very helpful and I love the spreadsheet!

2 Samantha of note•ify commented on 09/08/2010

Thanks Courtney!

3 Kristin commented on 09/08/2010

Thank you so much for sharing. It's really helpful.

4 Heedless Ceramics commented on 09/08/2010

Great SpreadSheet! The only thing I would add is to make a hard copy.

Thanks!

5 Chaitra commented on 09/08/2010

Courtney,
This is a awesome spreadsheet. I will definitely use in future.

6 Maya Macauley commented on 09/08/2010

Thanks so much for sharing Courtney, great tool! Also, thanks for visiting my site today - you and Jason helped me make it happen!
Thanks!

7 Courtney Dirks commented on 09/09/2010

Thanks for all the comments, I hope you find the spreadsheet helpful! Please let me know if you have any questions about the document or about my process in implementing it!

8 Ann Chikahisa commented on 09/13/2010

Thanks! I've been looking for a tried and true tool to help me track my inventory!

9 Thomas Saylor commented on 09/26/2010

Such a great tool, Courtney, thanks so much for sharing? Do you have any advice on accounting for the inventory of raw materials as well?

10 Courtney Dirks commented on 09/26/2010

@Thomas Saylor - Hi Thomas! For tracking raw materials, I have somewhat of an "old school" methodology. I sell jewelry, so I have to track every bead and component along with cost so I get a true evaluation of "Cost of Goods Sold" - I went to Storables and bought several bins for me to easily organize and separate each material I use. I cut little slips of paper and drop those in the bins so that I know the cost of everything and I can easily backtrack to figure out my COGS. It looks like you work a lot with fabric, I think it would be great for you to paperclip note cards with cost per yard to each bit of fabric. Then, you know exactly where to look if you're trying to back into cost.

Sorry for the long winded response! Hope that helps. Also, I looked at your site and I think we are soul mates, we have similar backgrounds transitioning from the corporate world to pursuing our creative passions! Hooray for us! :)

11 Carol commented on 11/13/2010

This is great info, thank you so much! I have a question about raw materials. Say you have some beads that you bought, but now you just want to sell them off without making anything out of them. Do you need to charges sales tax on that raw material, even if you didn't pay sales tax on it? Is this considered sales or does it just get taken out of inventory? I live in WA state also, if that is any help.

12 ceah commented on 01/14/2011

Thanks so much! This is so helpful.

13 Julie commented on 02/18/2011

I am new to selling on Etsy and learning all about it. I LOVE this spreadsheet but don't see one thing--what about calculating your Etsy listing fees?

14 Aviva commented on 12/18/2011

This is fabulous! Thanks!

I found you from a(n old) post on accountingspotonline.com. We're launching an online business, and tracking inventory has been the thing that scares me the most. I look forward to exploring the rest of your site, too. :)

15 julia @ thebackloop commented on 01/12/2012

This is so very helpful, thank you so much! This is exactly the starting place I need.

One question I do have about your costs - do you plan on adjusting for your operating costs as well at some point? (i.e. website hosting)? Do you plan on including an hourly rate for yourself at some point?

This is really great and it's giving me the perfect place to start - my New Years resolution is consistent record keeping. OK I'll be honest - ANY record keeping would be an improvement!

16 Courtney Dirks commented on 01/16/2012

Hi @julia @ thebackloop: Thanks so much for your comment. Pricing can be tough and there are many different methodologies to setting prices and accounting for your operating expenses/cost of labor. You can add a column in the spreadsheet to account for those expenses. I would also recommend that you look into Meylah's archive of previous blog posts where there is a wealth of resources on establishing your prices. Also, I would recommend that you look into Outright.com for accounting...it's very easy to use and tracks all your finances in one place.

17 Raquel commented on 01/24/2012

Thank you so much, Courtney!

18 Frances Marin commented on 06/23/2012

Thank you! This is the best spreadsheet! I am so excited to start using it.

19 Erica V commented on 10/12/2012

I came across a cool inventory management system at bizelo.com

Hope this help anyone.

20 kathy Othon commented on 05/24/2013

This looks like something that could help me get organized, thanks for sharing.

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