How do small businesses keep track of inventory? Spreadsheet, app or full system

The three ways small businesses keep track of inventory

Small businesses keep track of inventory in one of three ways: a spreadsheet updated by hand, a simple inventory app that counts items by phone scan, or a full inventory system that ties stock to purchase orders, sales orders and accounting. Which one is right depends on how many people touch stock and whether stock changes through orders or just through use.

How each method works day to day

Spreadsheet. One row per item. Someone subtracts what was sold and adds what arrived, usually at the end of the day. A reorder column flags items below a set level. It works because one person owns it.

Simple app. Each item has a record and often a barcode or QR label. Staff scan with a phone to add or remove quantity, and the app keeps a history of who changed what. Sortly lists quantity-based alerts that notify you when an item falls below a threshold.

Full system. Stock changes through documents. It rises when a purchase order is received and falls when a sales order is fulfilled. In inFlow Inventory, for example, you set a reorder point per product and location, receive by scan on the mobile app, and push bills and invoices to QuickBooks Online or Xero. Physical counts are run as stock counts that record the discrepancy between counted and system quantity.

Worked example: the same shop at three sizes

• 80 products, owner only. A spreadsheet is fine. A free app also fits: both Sortly Free and BoxHero Personal allow 100 items and 1 user.
• 300 products, three staff. The free tiers no longer fit. BoxHero Business covers 3 members and 1,000 items for $24 per month billed annually. Sortly Advanced covers 500 items but includes 2 user licenses. The next Sortly plan with more licenses is Ultra, with 5, at $149 per month billed monthly.
• 300 products, three staff, 40 vendor orders and 400 customer orders a month. Now orders drive stock. Zoho Inventory Standard allows 500 orders a month and 3 users for $29 per month billed annually. inFlow Inventory Lite has no order cap but includes 2 team members, so a third costs $29 more, for $128 per month on annual billing.

Whatever the tool, the reorder math is the same. The reorder point guide and the safety stock guide show how to set the numbers.

Common mistakes small businesses make when tracking inventory

• Updating in batches. A count that is a day old is a guess. Record movements when they happen.
• No fixed item names. The same product under two names splits its quantity. Set SKUs first.
• Never counting. Every method drifts. A short weekly count of a few shelves catches errors early. See the cycle count plan.
• Buying a full system for a counting problem. If nothing is sold from the stock, a scan-in, scan-out tool is enough.

When a paid inventory tool is worth it, and which one

A paid tool is worth it when the spreadsheet is wrong often enough to cost you sales or rush orders, or when a second person needs to update stock.

• Only counting and locating items: BoxHero or Sortly. For internal supplies with many staff scanning, inFlow Stockroom starts at $69 per month billed annually with unlimited scanning users.
• Selling online on a small budget: Zoho Inventory. Watch the monthly order cap.
• Buying from vendors and selling to trade customers: inFlow Inventory. It is not the cheapest, and its lower plans cap team members and locations, but purchases and sales are unlimited.
• Building products: a manufacturing product such as Katana or inFlow Manufacturing.

The spreadsheet versus inventory software page has a checklist for the first jump.