How to Keep Track of Inventory for a Small Business

To keep track of inventory in a small business, make a list of every item you stock with the unit you count it in, count everything once to get a starting number, and then record every movement: what comes in from suppliers, what goes out in sales, batches and waste, and what moves between places. Stock on hand is the starting count plus everything in, minus everything out. Count a few items every week to check the records against the shelf, set a reorder point for each item so you know when to buy, and spend fifteen minutes a week on what's low, what's expiring and what isn't moving. Below is each step, a week of flour worked through, and the point where a notebook stops being enough.

The short version

1. Make an item list: one row per thing, a clear name, the unit you count in, where it lives.
2. Decide units: how you buy it, how you store it, how you use it.
3. Count everything once for a starting number.
4. Record every movement: in, out, moved, wasted. No exceptions.
5. Count a few items regularly; fix differences with a reason.
6. Set a reorder point for each item.
7. Review weekly: low, expiring, not moving.
8. Or let TaroStack do steps 2 to 7 while you work. More below.

Step 1: the item list

One row per thing you'd ever need to count, including packaging. For a small bakery that's flour, butter, sugar, eggs, fillings, boxes, bags and labels, not only the products on the counter.

Name things the way your team says them, and keep one name per thing: "flour", "AP flour" and "all-purpose" as three rows is how three counts disagree. A short code helps when names get long, and a location makes counting quicker. Shelf labels to match are in inventory labeling ideas.

Step 2: units

A lot of small-business inventory mistakes are unit mistakes. You buy flour by the 50 lb bag, store it by the pound and use it by the gram; you buy boxes by the bundle of 100 and use them one at a time. Pick one unit to count each item in, and write down the conversions: 1 bag = 50 lb, 1 bundle = 100 each. Then every delivery and every recipe can be turned into the counting unit.

Step 3: a starting count

Count everything once, on a quiet day, in the counting unit. That's your opening stock. It won't be perfect, and that's fine; the regular counts in step 5 will correct it. How to run the count is in how to count inventory, and a printable sheet is in inventory count sheet example.

Step 4: record every movement

This is the step that makes it work, and the one that gets skipped. Every time stock changes, write it down:

Then stock on hand is: starting count + in − out. If anything moves without a record, the number is wrong from that moment, and nobody knows it.

A week of flour, worked through

Starting count, Monday        150 lb
+ Received, Wednesday         200 lb
− Used in batches             180 lb
− Written off, split bag        5 lb
= Should be on the shelf      165 lb
Counted, Sunday               158 lb
Difference                     −7 lb   (about $7.84 at $1.12 a lb)

Seven pounds missing in a week is a scoop that's a little heavy, a batch nobody recorded, or flour on the floor. Record the difference with a reason and correct the number to 158. If the same item comes up short every week, the reason is worth finding.

Step 5: count a little, often

You don't need to count everything every week. Count the expensive and fast-moving items weekly, the rest monthly, and everything once a year. Ten items on a Sunday takes ten minutes and catches problems while they're small.

Step 6: a reorder point for each item

A reorder point is the number at which you order more, so you don't run out while waiting for the delivery:

Reorder point = daily use × (lead time in days + safety days)
Flour:          25.7 lb × (5 + 2) = 180 lb

When the flour drops to 180 lb, order. The full method, with safety stock for busy weeks, is in reorder point example.

Step 7: a weekly fifteen minutes

Once a week, look at three lists: what's below its reorder point (order it), what expires in the next two weeks (use it first or sell it), and what hasn't moved in a month (stop buying it). That's the habit that turns a record into decisions.

Where this stops working

A notebook or spreadsheet does all seven steps for one person with a few dozen items. It strains when more than one person records movements, because two people update the same cell, or neither does. It strains when stock has lots and dates, because one number per item can't say which bag expires first. It strains when you make things, because every batch means subtracting six ingredients by hand in the right units. And it strains when you have more than one place, because the market stall's stock is in someone's head. The honest comparison is in inventory software vs a spreadsheet.

How TaroStack does it

TaroStack is these seven steps, done for you as you work, on a phone or a computer.

Your item list in an afternoon. Items, suppliers, customers and opening stock import from the spreadsheet you already have, with every row previewed before anything is saved, or from a photo of a price list or a handwritten count sheet. Units convert for you: buy by the case, stock by the each, cook by the gram, and TaroStack does the math. No plan limits how many items you have.

Every movement records itself. Receiving a delivery adds it, at the price you paid. Recording a batch takes each ingredient off stock in the right unit, from the right lot. A sale or a shipped order takes it out, and Shopify orders come in. Waste is written off with a reason (expired, spoiled, damaged, sample), so it's reported by reason, item and site. Every movement is a permanent record of who, when and why. And stock can't go below zero by shipping, selling, making or moving by mistake: TaroStack tells you what's there and asks you to count it first.

Counting is short and pointed. Counts run on a phone, even in the walk-in with no signal, and show what each difference is worth before you post it. TaroStack suggests what to count first: what it would cost to be wrong, times how much has happened since anyone looked. So the ten minutes on Sunday go to the ten items that matter.

And the weekly fifteen minutes is a screen. The reorder list shows every item in days of cover at the rate it's going out, with a red line where an order placed today would arrive too late, and reorder points suggested from how stock actually moves. Lots carry their dates, oldest goes first, and TaroStack forecasts what will expire before it's used and what it'll cost. Stock that isn't moving shows how long since it last went out. Alerts come in the app and by email, one per problem or one summary a day.

Items, units, receiving, counts, lots, expiry, the reorder list and alerts are on every plan, from $49 a month; recipes and batches that take ingredients off stock are on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What is the easiest way to keep track of inventory?

A list of items with the unit you count in, a starting count, and a record of everything that comes in and goes out. Software that records the movements as you work, such as receiving and sales, is easier than writing them down.

How do I keep track of inventory in Excel?

One row per item, columns for the starting count, received, used, sold and wasted, and a formula for what should be on hand. Count regularly and correct differences. It works best for one person and a small range.

How often should a small business count inventory?

Count expensive and fast-moving items weekly, the rest monthly, and everything once a year for your accounts. Small, frequent counts catch problems sooner than one big count.

What is the formula for stock on hand?

Starting count plus everything received, minus everything sold, used or written off. In the example: 150 + 200 − 180 − 5 = 165 lb expected, against 158 lb counted.