How to do a stock take in your shop, step by step

What is a stock take?

A stock take is a physical count of every item in your shop or store, compared with what your records say you should have. The difference between the two, called the variance, tells you how much stock has gone missing, been miscounted or been recorded wrongly.

Stock records drift away from the shelves over time. A cashier rings up one flavour of juice instead of another, a delivery arrives one carton short, a burst packet of flour goes in the bin without being written off. A stock take brings the records back in line with what is really there, and the variances show you where the problems are. It also gives you a true stock value, which you need to calculate your profit properly.

Full count or cycle count: which should you do?

Do both. A full stock take counts everything in the shop or branch at once; a cycle count covers one category or area at a time, on a rotating schedule, so that every part of the shop gets counted over a few weeks.

A full count at the end of your financial year, with cycle counts in between, suits most shops. Count the categories where losses hurt most more often: cigarettes, spirits, phone accessories, cosmetics, cooking oil and anything small and valuable.

How do you prepare for a stock take?

Good preparation decides whether the count is accurate. A rushed count on untidy shelves produces variances that are really counting mistakes, and you waste days chasing losses that never happened.

1. Set the date and time. Choose a quiet period: before opening, after closing, or a slow afternoon for a cycle count. Tell staff in advance so nobody is surprised.
2. Finish the paperwork. Record every delivery that has arrived, every transfer between branches and every return to a supplier before you count. Goods on the shelf that are not yet in your records show up as false surpluses.
3. Separate what should not be counted. Move damaged goods, expired stock and paid orders waiting for collection to a marked area, and deal with them separately.
4. Tidy and group. Bring each item together in one place, face the labels forward, and mark open cartons clearly.
5. Map the shop. Divide the shop and store into numbered areas (shelf 1, shelf 2, back store, fridge) so that nothing is counted twice or missed.
6. Prepare count sheets. List the items for each area with an empty column for the quantity. Leave out the quantity your records expect.

How should staff count the stock?

Count in pairs and count blind. One person counts and calls out the quantity, the other writes it down; for valuable items, the second person counts again. Pairs make mistakes less likely, and they protect each counter if a figure is questioned later.

A blind count means the counters do not see what the records expect. If a counter knows the book says 24, a count of 22 can easily become 24 to save time. Without the expected figure, the only number they can write is the one on the shelf.

A few habits make counts more accurate:

• Count in the unit you sell. If you sell sugar by the 2 kg packet, count packets, not bales. Three full cartons of 24 plus seven loose packets is 79, not “3 cartons and some”.
• Count loose goods in the unit you sell them in. Rice by the kilo, wire by the metre, paint by the litre, with decimals where needed.
• Finish one area before starting the next, and mark it as done.
• Note anything odd: damaged packs, items without labels, items in the wrong place.
• Stop selling from the area being counted, or record each count the moment it is made, so a sale between counting and recording does not create a false difference.

How do you compare the count with your records?

Subtract the quantity in your records from the counted quantity for each item. A negative result is a shortage and a positive result is a surplus. Then value each difference at cost, not at selling price, because cost is what the shop actually lost.

A worked example

A minimart in Machakos counts its cooking oil and sugar category.

The net loss is KSh 1,409 at cost. Valued at selling prices the figure would look larger, but that overstates the loss: the shop lost what it paid for the goods, not the profit it hoped to make on them.

Read the detail as well as the total. Three 2 kg packets short and two 1 kg packets over, in the same category, suggests a cashier sometimes rings up 1 kg sugar when the customer buys 2 kg. That is a selling mistake, not necessarily theft, and the fix is training and clearer product names rather than suspicion.

How do you investigate variances?

Recount first, then look for an explanation, and only then accept the loss. Many differences disappear on a recount or turn out to be paperwork errors.

1. Recount big differences with a different pair. Set a level that triggers a recount, such as any item more than KSh 1,000 out at cost.
2. Check the paperwork. Was a delivery recorded with the wrong quantity? Was a transfer sent but not received? Was a returned item put back on the shelf without being recorded?
3. Check for mix-ups. Look for a matching surplus in a similar item: another size, flavour or colour.
4. Check damage and expiry. Goods thrown away without a record show up as shortages.
5. Look for patterns. The same item short at every count, or shortages that started at a particular time, need a closer look. Our guide to preventing shop theft covers the usual causes and the controls for each.

Write down what you found for each large variance. At the next count you will know whether the problem is getting better.

Who should approve and post the results?

A manager or the owner, never the person who counted. Once the variances are investigated, the approved counts replace the old figures in your records and the shortages are recorded as a loss. Keep the count sheets and the approved variance list together, signed and dated.

How often should you do a stock take?

Count everything at least once a year, and count risky categories every week or month. If a category shows large variances, count it more often until you find the cause. A new shop, new staff or a new system are also good reasons to count more often for a few months.

How stock takes work in Wave POS

In Wave POS you can run a stock take of one category or of a whole branch. Staff enter what they count, and each count is compared with the stock in the system at the moment it is entered. Because sales keep changing the system’s stock while the shop is open, enter each count as soon as it is made.

The differences do not change your stock straight away. They post when a manager completes the stock take, so a doubtful count can be checked and recounted first. Each change then appears in the item’s stock ledger, which records every movement.

Other parts of Wave POS help before and after a count:

• Average cost. Stock is valued at average cost, so a difference is valued at what you paid for the goods.
• Adjustments. Damaged goods found while preparing are entered as adjustments, which wait for a manager’s approval.
• Transfers. Goods moved between branches are sent and received, and any shortfall is recorded as lost in transit, so it does not hide inside a stock take variance.
• Reports. The stock value, stock movements, low stock and negative stock reports export to Excel, CSV or PDF. Negative stock is a good list to count first: it usually points to a delivery that was not recorded or sales rung up under the wrong item.
• Count sheets. Export your product list to Excel or CSV and use it to build count sheets for each area.

See inventory management for how stock works across branches, or start a free trial and count one category of your own products.