How to Value Inventory When Selling A Business

This is a guest post by contributor Marla DiCarlo outlining how inventory and its value should be approached in any company which handles stock and its business depends on keeping detailed information about the inventory costs. 

Inventory has the potential to become quite the contentious issue when selling a business. If the seller and buyer do not agree on the inventory count or value, it will prove difficult to reach an agreement on the business' sale price. Though it will be challenging to accurately value the entirety of your company's inventory, it can be done. Let's take a quick look at how to value inventory when selling a business.

Tabulate the Inventory Cost

The first step to accurately gauge the value of your inventory is to determine the price of your inventory based on what you paid for those items or spent to manufacture them. If you paid varying costs for different items in your inventory, you need to know all this information in detail. It does not matter if the items were bought in bulk, purchased individually or made at varying cost at your manufacturing facility; you must determine the true cost of the entirety of the inventory based on what it cost to acquire or make those items. The individual or entity bidding on your business deserves to know exactly what it costs to acquire your inventory down to the penny.

Calculate the Inventory Sale Price at Current Rates

Break out the calculator and add up the true cost of your inventory based on the sale of each item at its current price. As an example, a company that sells widgets for $25 a piece would have an inventory value of $2,500 if it had 100 units stocked in inventory.  The sale price of your inventory will prove critically important to those interested in placing a bid. Such a sale price can be determined at today's rates or - if that's impractical to find out - in the rates you typically sell at.

Account for Goods That Cannot be Sold

The value of unusable goods, damaged goods and goods that cannot be sold for another reason must be subtracted from your inventory's retail value. As an example, consider a frozen fish supplier that has a power outage along with a generator failure that causes 100 servings of fish to spoil. If the retail value of each fish serving is $20, a total of $2,000 must be subtracted from the inventory' value. However, the cost of inventory remains unchanged. Unusable goods affect the inventory's retail value as opposed to what it cost to acquire or make the inventory. This is also information which needs to be maintained at any time and be easily retrievable

Perform Ongoing Adjustments of Inventory Values

Inventory value is dynamic rather than static. The true value of your inventory hinges on current market rates. This means business sale negotiations that take place weeks or months prior to the current date will be based on the inventory's price at the point of those initial talks. Continue to adjust your inventory value as time progresses to ensure they reflect the items' true value at the current moment in time. Otherwise, there will likely be a disagreement as to what the actual inventory value really is when negotiations advance. Furthermore, inventory value must be adjusted as new items are added and old items are sold.

Strive for a Mutually Beneficial Inventory Value

The inventory value must prove acceptable to the business buyer as well as the seller. In some cases, it makes sense to sell inventory separately from the company. The bottom line is there is no 100% foolproof means of tabulating the true value of inventory as there are multiple methods to calculate value. Discuss inventory valuation with the party interested in acquiring your business, reach an agreement on a mutually beneficial inventory value and both sides will feel as though they are getting a fair shake.

Marla DiCarlo is an accomplished business consultant with more than 28 years of professional accounting experience. As co-owner and CEO of Raincatcher, she helps business owners learn how to sell a business so they can get paid the maximum value for their company.

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Choosing suppliers based on product lead times and availability

If you run your own retail or wholesale company, you need to ensure a supply chain that works as efficiently as possible. Selecting the right vendor(s) to work with is an essential procedure. While you manage your sales and orders, a wrong choice of supplier may end up being devastating. As such, to arrange your orders it is essential to know with who you will cooperate with. Shortlist all the possible vendors that can provide the products you want and figure out who is better for your needs.

As a first step, you should choose partners which are on the same page as you and are compliant with their commitments. Make sure your choices of partners are straightforward and clear. You are not looking only for extra help, but also for someone who is an expert you can rely on. It is important for your cooperation to know what they can provide to you and what are their requirements. So speak with many vendors and go into agreement with only the ones that check the most boxes which matter to you!

List the particulars of each agreement with your suppliers

Once you have created a list of your vendors, then attach all the agreement features that they offer. You can have a look and give priority to the ones you consider more valuable for the products you need. A helpful piece of advice is to gather all the accurate information from every vendor in a single point. You can use this later as a reference when choosing where to order from (without having to dig up contracts, agreements, etc)

Know the product details, the stock levels and the lead times of your suppliers

You should also be able to know for each product the information you need and which is relevant to the supplier. For example, in Megaventory we have a table such as the following. 

That way you can know at any time the exact price at which the supplier offers the product to you and its product code and description (often supplier details are different than how your business presents them to its clients). It is crucial also to know about the stock level of each supplier and the lead (delivery) times of every product.

Ensure you can handle variable quantities and lead time ranges

Problems are often presented during communication with the vendor. One of the most significant is when there is a misunderstanding about the lead time of the product - ie how long it will take for an order to get to you. Be sure that you have agreed for the precise date you expect to receive a product so you are able to organize fulfilling your orders precisely and on time. It is key you have time ranges which are pre-defined and not too wide. Using Megaventory, you can define and see the individual delivery times and the quantities of every supplier, as shown below.




You are able at any point prior to making your order to have a look at every vendor on your list. It is useful to check the period of time they deliver and the quantity ranges of their products. That way you can make the optimal purchase prioritizing either against price, delivery time or other vendor preferences.

Organize your orders

After you have determined from which vendor a specific purchase order will be served, and consequently know the expected date and the quantity ranges of every product, it is time to fill in your purchase order. At this point, the supplier from whom you will receive the product and the quantity being ordered should be all you need.

In case of managing multiple locations, it is also important at this point to wisely pick the inventory location where you will be able to receive the products ordered. 

After you set up such a purchase order with one of your vendors you should be able to know when each item in the order arrives. You should also be aware of the earliest and latest delivery times of the order, taking into account all the individual products in the order and their respective lead times. Megaventory will easily do the calculation for you but you can also override Expected Dates to enter your own values.

This process will happen more than a few times and from various vendors before you can consider the stock as having been replenished adequately. In fact, in most industries, this is an ongoing process. As such, it is helpful to gather all your orders on one or more single list. It can be a great advantage to know any time you want every detail of all the purchases you have made. Here’s how Megaventory users complete and organize all their orders.

A stock procurement system for your company and your suppliers

The key before you start the selection process of the right vendor is to choose the right system to integrate into your company. In this case, you are looking for a system such as Megaventory to help you organize all your products and collect all the information about the selected suppliers. You can see anytime the stock of your supplier, the purchase price they offer for every product and the expected date you will receive your product.

The implementation of a system like this can help you prioritize and select efficiently the supplier with the best price and lead time. It can provide you all these features you are looking for, it can help you avoid mistakes and move fast and eventually it can help you grow your business much faster.


Do you import stock wholesale in order to sell to retailers? Do you purchase goods to deliver to your customers? Do you rely heavily on your suppliers continuous good performance?

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Inventory Organization: Update Your Layout, Save Pick Time

When it comes to inventory, you need every process to move like a well-oiled machine. As one of the last and most important steps in the retail pipeline, you never want picking to be the step that slows you down. But your machine won’t work if the parts don’t fit together well. This is where effective inventory organization comes into play. A great layout that makes the most sense for your space can assist everyone in pulling inventory quickly and easily, making the whole process run a little bit more smoothly.

Inventory organization is rarely easy, though. Space and time limitations, the constant in and out flow of of product, and the sheer overwhelming feeling that comes with tackling such a big task can cause re-organizing your inventory space to fall by the wayside way too often and for far too long.

Fortunately, there are a few steps you can take to get started, and get your inventory space organized in a way that maximizes your space and optimizes your resources.

Stock Optimization Starts With Space Assessment

What's happening? Where is it happening? And is that the best possible place for it to be happening? There are a few of the questions you need to be asking when deciding on the most efficient layout for your picking space.

Of course, keeping things at ground level, whenever possible, will help make picking easier and faster.   But without ample room and well-planned paths to navigate, even the simplest setup will slow down and eventually create bottlenecks and jams.

Organize your inventory so there is a well-defined flow for employees to take on their picking journey.  Simple steps like grouping items that are commonly shipped together, and routing traffic to avoid doubling back or constantly retracing their steps can make a big difference, especially when space is limited.

Visualize Product Movements to Improve them

Your current setup may seem like it is working.  But your current layout is likely masking a huge problem.  Wasted motion and needless traffic in the wrong places.

Wasted motion in warehouses costs billions in productivity every year. In food warehouses alone, wasted motion consumes 6.9 weeks annually, at a cost of $4.3 billion annually.

In order to help you conduct the space assessment and optimize your warehousing, try literally mapping out the current flow. A paper and pen are all you need to start. Or use the time-lapse camera function on your phone to watch a whole day’s traffic Which routes are being taken most often? Do they make sense? Do they involve lots of long trips or out-of-the-way detours to pick the right products?

Also keep an eye—and make note of—where things are going wrong. Is there a particularly overstuffed corner where people get caught up? Is there a reshelve tub that’s constantly parked in the wrong place? Are there areas where too many people are picking at once because of the popularity of the item?

Knowing of these issues with certainty—witnessing them and taking note—can help your get to the root of your traffic problems and visualize how to begin fixing them.

Storage Cleaning and Upkeep Are Mission-Critical

From a safety standpoint, from an efficiency standpoint, and ultimately from a financial standpoint, cleaning and upkeep are an absolutely critical part of inventory organization. Just like you plan ahead to ensure you never run out of an item, you should also be planning ahead to ensure your inventory space stays well organized and tidy.

Having a plan and arranging your space once is not enough. Once everything is in place for optimal picking time and function, you have to make sure things stay that way. Everything needs to have a designated area. Empty pallets, boxes, and other trash should be removed as soon as they are created. Any spills or other messes should be addressed immediately.

Clean-up and reset at every position and every shift or day have to become second nature.  Perhaps use project management tools to ensure this clean-up process happens each day. A place for everything and everything in its place. Enforce a no-mess policy for a couple of weeks and you’ll be amazed at how big an impact it has on overall energy and flow.

Constantly Do Warehouse Audits

Is there any bigger headache than trying to work around inventory you just don’t need? It takes up space, it requires time and energy to try and figure out what to do with, and it ultimately means more work to finally get rid of it.

Well, an ounce of prevention is worth a pound of cure, and the best thing to do with unneeded inventory is to avoid having it in the first place. By regularly evaluating low-turn, out-of-season, EOL inventory, you can create more accurate forecasts for what you need, and prevent the buildup in the future. And for any excess you already have lying around? Have sales/marketing develop strategies to sell through, return, or liquidate.

Product Location Is The Most Important Thing

It really is everything. According to Supply Chain 24/7, “travel time can easily account for 50% or more of order picking hours” so  it is imperative that  travel time is reduced and picking strategies are in place so time is never wasted. So much of this depends on location. From the location of the item within your space, to the space itself, location plays a vital role in determining the efficiency of your picking. Make sure your understand your location, its drawbacks, and its strengths, and plan accordingly.

And while all these tips might help make you make a better plan for achieving inventory organization, the biggest predictor of efficient picking is this: treat inventory process initiatives as mission critical for the company. Sure, there are lots of steps that come before and after, but in the long run, good business depends on good picking.

This is a guest post by Laura Hudgens, a writer for TechnologyAdvice.com. She is a communications instructor and freelance writer who studies and writes about technology, media, science, and health.

Making Inventory Management More Efficient Using Weighing Scales

It is crucial for every single business which deals with inventory to keep track of it. However, keeping track of each and every piece of inventory can be extremely challenging, especially if the inventory consists of small parts. In fact, counting such parts by hand is rather impractical. So what do you do? You implement a reliable weighing scale system such as industrial floor scales that enable you to count many pieces of the same part quickly by using the weight of each piece.

Here are 5 tips on choosing the right weighing scales to make inventory more efficient:

 Consider the Scale’s Scope and Application

In case you are not sure how to choose floor scales for inventory, then consider your inventory process and the volume of the stock that needs to be counted. If you have small pieces of inventory, then a large scale wouldn’t be ideal as bench scales would be more efficient for the job. Not only can a bench scale do parts and check counting but it can also be connected to a remote platform to increase its capacity. You also need to consider the size of your inventory as well as the scale to ensure your stock fits into the weighing pan. Implement scales that can accurately measure even the smallest variation in the weight. Lastly, ensure that the scale is fully adapted to your products.

Program the Scales

Several scales have features which allow you to program them. For example, you can:

•   Set a sample size by using a numeric keypad, allowing the counting scales to count the items based on that or by checking the weight of an initial sample. These ways will ensure the accuracy of the scales.

•   Make sure you measure and store the weight of your pallets initially. This will help in weighing palletized goods as it will remove the weight of the pallet, thus the final displayed weight would be that of just the goods.

By programming the scales, you can be sure that they are optimized for the necessary weighing tasks, thus saving time and energy. Moreover, some scales can be connected to multiple scales and platforms in order to be more efficient.

Calibrate the Scale Before Each Process

The accuracy of all measuring devices, including weighing scales, will degrade over time. It can be caused due to normal wear and tear, hazardous manufacturing environment, electric or mechanical shock, etc. All these cause errors in readings, which can be eliminated by regular calibration. You must calibrate your scales before starting the inventory taking process. If the scale is being used to manage the inventory throughout the year, then you need to ensure that it is calibrated frequently as it will eliminate the errors and produce accurate results.

Choose a Scale Based on Your Goals

Weighing scales can be applied in various industries to measure different types of inventory. For example, industrial weighing scales are ideal for big warehouses and heavy products, bench scales and floor scales can be used for versatile inventory and smaller counting scales are great for small parts. Choose the right weighing scale based on your requirements.

Integration and Remote Access

The scales can be easily integrated using a standard network to connect to an existing network (Ethernet). This connection allows remote access to inventory levels in addition to increasing the efficiency and convenience of the working process. This makes walking back and forth to constantly check the inventory unnecessary. Integration also helps in ensuring that you never run out of supply with its feature of remote monitoring of stock. This feature also enables optimization of the entire supply chain and trend analysis from the comfort of your computer.

Weighing scales not only help you improve inventory management process but they also increase the overall productivity and profitability. Therefore, it is a good idea to implement them in your processes, if they are applicable.

This is a guest post by contributor Kevin Hill.

Kevin Hill heads the marketing efforts at Quality Scales Unlimited in Byron, CA. Besides his day job, he loves to write about the different types of scales and their importance in various industries. He also writes about how to care for and get optimized performance from different scales in different situations. He enjoys spending time with family and going on camping trips.

How to Address Manufacturing Challenges: A Modern Approach

Modern manufacturing companies have a lot on their plates. While you’ll often hear for example how manufacturing is on the decline in the United States, that’s actually not the case in many different industries. Despite the recent upturn in some areas, there are more challenges than ever faced by modern manufacturing companies. These struggles are empowering engineers and forward-thinkers to establish new solutions that will carry manufacturing into the 21st century.

While what follows is in no way a complete list here are the most common challenges facing modern manufacturing companies today.

Image via Unsplash

Manufacturing Labor Management

Labor jobs have long been dominated by the Baby Boomer generation that grew up thinking manufacturing jobs were the best option right out of high school. As this generation continues to age, many developed countries have seen a decline in skilled labor for these manufacturing positions. Over the next decade, there is expected to be an increased number of openings in these positions, but there are no longer enough laborers to meet this demand.

In the next few years, there will need to be both improvements in automation and an increase in skilled training opportunities for new members of the job market. This means manufacturers need to get smart about hiring. Many jobs can be replaced with automation, software, and outsourcing. This not only means lowered expenses for companies but also more efficient production.

Handling Production Global Pressures

One of the most well-known problems facing modern manufacturing companies are the global pressures to compete with big powerhouses like China that are taking over the manufacturing industry. However, manufacturing in developed countries is making a comeback as more Western manufacturing companies are targeting new audiences. Manufacturing companies will need to adapt to meet the global pressures of this new marketplace. Ultimately, there is a need to stay ahead of this competitive game. Manufacturers can gain an edge by staying informed about and acting upon the latest developments both at home and abroad.

Assembly Technology Advances

Technology is changing every day. We see people being replaced by machines on the production line, and this leads to greater speeds, precision, and advancements in product development. The common practices such as injection molding and CNC machining (learn more about this) are still present in the manufacturing industry but 3D printing, for instance, is taking this industry by storm.

Because the technology is changing so quickly, it’s difficult for manufacturers to keep up with changes. The companies that are able to adapt quickly are the ones that will see the most success in the digital age. Changes that we are seeing most companies make today include moving to cloud technology and modular software. These are small steps, but ones that have a big pay off.

Manufacturing-related Data Protection

With the rise of technology comes new challenges in data security. Cyber attacks are on the rise recently and nobody is immune, especially manufacturing companies. Because manufacturing companies of today rely so much on technology, they’re highly susceptible to attacks from cybercriminals. The only way to protect themselves is to invest in top security provisions that prevent software from accessing important data and processes necessary to run a business.

Another data change is the introduction of GDPR compliance. This is no longer optional, and companies need to consider compliance with new laws with every new move. Security and privacy issues are a problem for all businesses today, but manufacturing companies have to be especially careful!

New Marketing Strategies

All businesses are facing a new world of marketing. Things of the past like mail ads, publication ads, and cold calling are no longer effective. Manufacturers need to target businesses in new ways. B2B marketing is all about digital strategy nowadays. By positioning themselves as experts in their fields and the best choice to solve a customer's problem is the only way to succeed in the digital marketplace. SEO, social media, and content marketing are all ways for businesses today to reach new audiences with their marketing.

Image via Unsplash

Environmental Concerns from Production

Finally, there are changing regulations that affect the way manufacturing companies conduct their production. Because manufacturing and environmental concerns often go hand-in-hand, companies need to address these new environmental regulations to ensure they’re following the law. This usually has to do with how employees are exposed to materials, how manufacturing waste is handled, and the byproducts of their production. These regulations can vary by region, so the proper understanding of specific laws is necessary.

Companies looking to reduce their environmental impact should make an effort to go paperless as a good first step. This is an easy change, and it’s also more efficient to minimize paper communication across company departments. These small changes have a big impact, and they show real progress.

Manufacturing changes are affecting all sectors of business. As the world of manufacturing continues to change, companies will need to adapt to new movements, trends, and technology. Luckily, these challenges aren’t impossible to overcome! As long as modern manufacturing companies are proactive, their future looks bright.

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About The Author

Ashley Lipman is an award-winning writer who discovered her passion in providing creative solutions for building brands online. Since her first high school award in Creative Writing, she continues to deliver awesome content through various niches.