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10 Things to Do Before Beginning a Physical Inventory Count

Posted on March 4, 2008 by Archives
Are you a small business owner just trying to keep track of the odds and ends you have lying around your warehouse? Are you trying to complete an inventory just to balance your own records, and not for tax reporting purposes? If you answered, “Yes!” then this blogs for you!

Completing a physical inventory, while necessary, is a time consuming that is typically the cause of many small business owner’s nightmares. Completing an inventory is designed to reconcile your records of quantity on hand, with actual quantity on hand. You laugh because you see the nightmare forming, don’t you?

If you have a fool-proof warehousing system, then you may be thinking inventory is a breeze. Let me assure you… no one, not Best Buy, not Home Depot, not even Target has a fool-proof warehousing system. All the RF Devices, software and intelligence in the world cannot maintain a fool-proof system. It’s a nice theory, but the human element is too large!

By now you are thinking, “Great! If Target and Best Buy have a hard time, how the heck am I going to figure it out?” One good thing is that you are not completing your inventory to turn in to the IRS for taxes…so take a deep sigh of relief! Approaching inventory with a positive attitude is the first step in the right direction. Being properly prepared can help maintain your level of optimism and can help avoid an overwhelming task that boils down to scanning and rescanning…or worse…counting and recounting.       

Here are 10 things you can do ahead of time to try to eliminate some stressors of completing your inventory:

10. Schedule your inventory! Do not come to work one morning and decide that you have extra time that day and begin an inventory…this is the first ingredient of a disaster! This headache is definitely avoidable.

9. Let others know when you are completing your inventory. This includes your customers. Let them know that for that day (or two) that you will not be fulfilling orders due to inventory. Alerting others of your plans will help curb unnecessary requests for quantity available and shipping statuses.

8. Go through your warehouse the week or day before your scheduled inventory and set aside and label any areas that have a specific purpose, or that are known trouble areas. Some examples could be:

  • “Missing Pieces” for any product that is missing anything
  • “Damaged” for any product that has visible damage to it
  • “Individual Quantities” for items in packs/cartons that need to be counted individually

7. Go through the warehouse the week or day before your scheduled inventory and label all major sections/subsections of the warehouse in accordance of how your inventory report will read. For example, if your warehouse is organized by manufacturers, and your report is by manufacturer/model number, label all individual manufacturers. Label your warehouse by any families, industries, categories, etc., that show on your report for ease of location


6. If using a computer generated report for counting, ensure that there is adequate space for noting any discrepancies. Some notes that you will want room for are:

  • Actual quantity on hand available for shipment
  • Number of damages
  • Number with missing pieces
  • Misc.

5. Ensure that your method of counting is intact. If scanning, ensure that all scanners are charged and their connections are working before you begin. If counting, it is best to delegate colors, in case you get interrupted. For example, for every item counted you can put a yellow slash somewhere on it, then on your sheet (since you are using the age old counting method you will have the report in your hand) decide what number intervals to mark (i.e. 5, 10, 25).

4. Color coding is always a good organizational technique that can allow many people to communicate effectively. If you are going to color code, ensure that there are plenty of supplies (stickers, markers) for everyone. Some examples of how you could use colored markers or stickers are:

  • Counted Product
  • Damaged Product
  • Needs manager attention

This is especially helpful if you have a team that is completing the inventory, each member with a specific job. If it is a task of one person to continuously go through and pull all inventory marked as damaged to the “Damages” section, then the products should be appropriately marked for that team member.
3. Have a team huddle the morning, or night, you begin. Encourage your team to be thorough yet speedy. If they come across a product that is out of place or unable to be scanned/counted, mark it (with the appropriate color/sticker) and move on.

2. Provide donuts and coffee or bagels and orange juice for your team. A little encouragement goes a long way.

The number one thing you can do before you begin your inventory…

1. Pray for patience.


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