Stock: how much to hold
Hold enough stock to keep selling without locking your cash up on the shelf.
6 min read
Stock is money sitting on a shelf. Too little and you turn customers away. Too much and the cash you need for rent and wages is tied up in boxes — some of which will go out of fashion, expire or get damaged before they sell. The goal is the smallest amount of stock that never makes you say "sorry, not today".
Not all stock is equal
Most shops find a small number of items bring in most of the sales. Sort what you stock into three rough groups:
| Group | What it is | How to manage it |
|---|---|---|
| Fast sellers | The few items that sell every day | Never run out. Check every day or two. |
| Steady sellers | Sell every week | Check weekly; reorder on a fixed day. |
| Slow sellers | Sell now and then, or are seasonal | Hold the minimum. Question every reorder. |
Running out of a fast seller loses you sales and sends regulars elsewhere. Overstocking a slow seller costs you cash for months.
When to reorder
For each fast or steady item, work out one number: how low can stock go before you must order again?
daily sales × days your supplier takes to deliver + a small buffer = reorder level
A made-up example: you sell 10 packets a day, your supplier takes 4 days, and you keep 2 days extra in case of delays. 10 × 4 + 10 × 2 = 60 packets. When stock falls to 60, order.
Write the reorder level on the shelf or in your stock book. Then anyone — you, a family member, a helper — can tell when to order without guessing.
How much to order
Order enough to last until the next regular order, not "as much as the supplier offers". A bulk discount is only worth it if you'll sell the extra before it ties you up:
- Saving a little on price but holding stock for three extra months usually costs more than it saves.
- Ask suppliers for smaller, more frequent deliveries. Many will agree for a regular customer.
The usual mistake is buying big because of a deal, then being short of cash for rent. A discount you can't afford to hold is not a saving.
Count it
At least once a month, count what is actually on the shelf and compare it with your records. The difference tells you about:
- Damage and expiry — how much is being written off
- Mistakes — goods sold without being recorded
- Theft — uncomfortable, but better known than not
Count your fast sellers more often. A quick weekly count of the top few items catches most problems early.
Clear the slow stock
Every few months, look at what hasn't moved. Then do something: a discount, a bundle with a fast seller, return it to the supplier if they'll take it, or sell it off to another shop. Cash today is worth more than stock that might sell next year.
First in, first out
Sell the oldest stock first. Put new deliveries behind the old on the shelf. For anything with an expiry date — food, medicines, cosmetics — this isn't a preference, it's what stops you throwing stock away.
Stock and cash flow
Stock is the biggest place cash hides in most shops. If money is tight, look at the shelf before you look for a loan — see Cash flow earlier in this course.
Ask the tool below about your own stock: tell it what you sell and how fast, and it will help you set reorder levels.