Hidden Profit Killer in Your Business: Poor Inventory Management
By: Sharee Murphy, MBA (c)
It’s easy to underestimate the cost of poor inventory management. Whether you run a product-based company or a service that relies on materials, every item sitting unused is money you can’t access — and every missing item is a lost sale or delayed project.
Why Poor Inventory Management Hurts Profit
Overstock ties up cash you could invest elsewhere.
Understock leads to rush fees, delays, or missed revenue.
Disorganized storage means wasted time finding what you need (and money when you break down and just buy it again).
Real-Life Example: The Event Planner Who Couldn’t Find the Lights
A business owner had all the tools to execute an event perfectly — except she couldn’tfind the lights. She ended up renting replacements last-minute, paying double for something she already owned (only to find it later, when she didn't need them).
The Principle: Stock Smarter, Not More
Inventory should move through your business efficiently — not sit idle or disappear into chaos.
Quick Audit You Can Run Today
List all inventory and its current quantity.
Note how often each item is used.
Set reorder points so you never run out.
Schedule quarterly checks for accuracy.
Takeaway:
Inventory isn’t just stuff — it’s cash in another form. Manage it well, and you’ll keep both your operations and your profit healthy.
***This article is part of our Hidden Profit Killer series — uncovering the subtle ways businesses lose money and how to stop it.***
Read the rest of the series:
Unclear Roles & Expectations
Inefficient Processes
Poor Communication
Underutilized Talent
Poor Inventory Management
Scope Creep
Ignoring Data
