iMagic Inventory
Monday, December 30, 2013 / Alan Wright

Spending money in the obvious place isn't always the most cost effective. Alan Wright dives into the world of inventory management and POS to examine some alternatives.

There is a great scene in an old episode of The Sopranos during which two mafia members approach a "new" small business owner and hustle him for some "protection money." The store owner apologizes, stating that even if he could, he couldn't. The reason being, since the store was no longer a mom and pop shop and now an official franchise, every transaction was instantly recorded in the inventory system as soon as it happened. If that protection money were given, upper management would find out immediately and there would be a major problem.

This illustrates a simple fact: when you work with an inventory software program, you get rid of all these problems. You can ensure 100% reconciliation for all of your financial matters. The system is put into place to eliminate all errors, and standardize income and expenses for easy reporting.

If you remember doing business way back in the day, you probably remember that there was always a long, nerve-wracking wait while you tried to tally up the cash on hand and found out it didn't match the total income for the day. That either meant that someone goofed up and multiple sales were not recorded properly, or someone was up to some funny business.

Let's Talk About Your Two Jobs

From there the problem spiraled. You and your staff spent so much time chasing mistakes and finding that paper trail, which you let the customer service suffer. If only you could be there, 24-7 managing the company and making sure these problems didn't happen. That's why they sometimes call this "working two jobs with one paycheck." When you're there, things go great because you understand the policy in your own head. When you're not there, other employees misunderstand information, make mistakes, and generally complicate your life. When you come back, you have to fix all of the mistakes that were made in your absence. Just the fun part of being boss, right?

And it's easy to dismiss this problem, especially if you're just talking about a dollar difference on a piece of fruit or a small part. However, these dollars and cents add up for every sale, and by the end of the year you have a huge, gaping hole of loss. That's loss that will have to come out of your pocket as the business owner... unless of course, you take a proactive approach to the problem and play manager rather than boss.

Hire Robot, Not Human!

That means implementing a POS system inventory software system that instantly tracks accounts receivable and payable. This is the type of system that catches sudden shrinks within your system and accounts for loss and gain every minute of the day. Modern inventory software has receiving and inventory modules that help you locate where the losses occurred, essentially doing the job of a fast-thinking employee.

So it might be time to quit these two jobs and to invest in a lifelong non-human employee that gets it right every time. With inventory management software, you dismiss all of these problems and create a universal tracking system that is inerrant and customizable. It's a virtual you, a carbon copy of your business knowledge, since the system enforces your policies, your prices, and your exceptions to the rule. You can even enter in exceptions for individual items.

But I Already Use MS Word!

A lot of small business owners hold off buying inventory organizing systems because they figure, "I have Microsoft Word." Meaning they are "modernized"... they don't just use pen and paper because that's too much of a risk. The problem however, is that they use Microsoft Word and Excel in much the same way as they use a pen and paper.

All of your information is stored in the computer but it's not centralized, it's not connected to your cash register, your check system, or your debit/credit card system. Therefore, you're still running around, flipping through pages and screens trying to reconcile missing funds, short tallies and discrepancies.

Why you might as well be paying for "protection money" because human error (not to mention the possibility of fraud) is a huge yearly loss for most business owners. It's a loss you certainly don't need, can't afford and certainly don't like... but that you pay anyway. If you're going to give money away, give it to charity. Don't lose money in the cracks of business.

Centralize Your System and Make All Apps Work for You

For instance, one of the advantages that our clients appreciate about iMagic Inventory is that it is expandable and customizable with other systems. You can actually link the system to your own Microsoft Office and Excel and Access, and link your entire computer system together for complete reconciliation. You do a mail-merge, custom reports, custom invoices with your linked MS Office copy and still track all of your inventory right down to the final sale. Integration with Microsoft's SQL Server is also an option, when it's time to change your inventory orders. Best of all, you won't spend hours searching all of your different programs trying to find the discrepancy. It's there, it's everywhere... your centralized system will always be able to give you that precise information.

Restaurants March into the New Age with Advanced POS / Inventory Systems

Many business owners think of inventory systems as a department store investment, when in actuality, it is a customizable solution for any business. For instance, shrewd restaurateurs understand the importance of tracking every item of inventory until it becomes a sale. Because losing a "little" quickly spirals into losing a lot when hundreds of items are combined and served over the course of a day.

Restaurants use inventory systems for in-store ordering, online ordering, online reservations, low stock alerts, wireless table side ordering, and even for tracking missing items in the storage room or kitchen. Why, using an advanced inventory system could even prevent employee theft for very small items, especially if you keep employee logs of who enters the room at what time, courtesy of keycard lock integration. Not surprisingly, pizza delivery services, nightclubs, and food trucks are controlling their losses by implementing advanced tracking systems and they save every penny.

There is only one way to prevent against profit holes - by installing a system that counts everything. You want to organize and integrate everything together, so much in fact, that passing a dollar under the table to a couple of wise guys would be impossible. Now that's a protection worth paying for.