I’m an Etsy seller, Do I really HAVE TO do inventory management? 4 reasons why you should!

People doing inventory management in a warehouse
Photo by Alexander Isreb from Pexels

No one HAS TO, but…

If you’re a maker selling products (anywhere, not just Etsy) or just starting out with your product-based business, formal inventory management is probably the last thing you are thinking about.  However, as your business grows and your sales channels diversify, sales will increase and the need for tracking sales, stock and supplies will be critical. A solid inventory management process will save you tons of time and headaches.

Establishing a process can feel overwhelming and time-consuming but this information should help you, just as it helped me. This is part one of a series on Inventory Management that will be posted over the next month, so be sure to look out for each post as we dig deeper into the elusive “Inventory Management” process. I’m NOT AN EXPERT, I am a maker selling products and learning right along with you. I’ve done some research and have put some things into practice so I am hoping to steer you in the right direction and links to additional resources will be available throughout each post. Check them out so you can learn more about what may be applicable to your specific business. Let’s get to it!

LeeAnn, What is this inventory management you speak of?

Inventory Management basically refers to the process of keeping track of the products you sell and those products are part of your business assets. For a small business, the process can be as simple as a count of the number of items on the shelves to a complexity that can include tracking supplies, raw material, and analytics that can help you to plan the next steps in your business and a production schedule based on your data. 

Finished products, works in progress, raw material, etc. can all be considered inventory. As a maker, there are nuances to your individual business and the formal definitions of Inventory, especially for tax purposes, can be very specific so it is best for you to speak with your accountant or bookkeeper. Additionally, there are some blog and workshop resources on https://www.score.org, www.sba.gov and your state-based business resource sites that can shed some light on the specific values that are applicable to your business.

What kind of impact does Inventory Management have on my business?

Inventory management documentation
Photo by Denny Müller on Unsplash


Now you will be armed with data! You will be able to use your inventory data to determine how you move forward with your business, you will be able to plan. Your inventory data is your sales data so you will have better insight into how your products are performing and how they could perform in the future. The more robust your process, the more data points you capture, the more information you will have about how your business is performing. This data has been very useful for me to plan my production schedules and has even given me some insight into when I should launch new products.


With up-to-date counts of your goods and supplies, you are able to provide customers with accurate information on what you have available for sale at that moment. If something is not available, you are able to more accurately predict when or if it could be. The days of selling something that you didn’t realize was out of stock will be over!


Sales tax, Bookkeeping, etc.– Again, no expert here so consulting your accountant or bookkeeper is best. As a product-based business, your state has requirements for reporting sales/paying sales tax. Your products are considered assets, there is a calculating cost/price benefit and so much more.  There are a number of financial benefits to having an inventory management process and the more information you collect and document the more you can use to determine your current financial status and plan the future.


This may not happen at all if you are a smaller business, a one-person company or a company without a storefront but if you are a retail establishment with a physical customer flow this is something that could be happening and you may not even be aware of it. Don’t get me wrong, I’m not saying it doesn’t happen with a smaller business but it may not be prevalent. As a one-person business myself, I have had theft happen even when I do craft and art shows. I always document the inventory that I take with me to the shows and reconcile it with my sales. Occasionally, there is a discrepancy that I can usually attribute to theft. I’ve even had someone take pins and leave the packaging on the table! It’s RARE but theft can happen to any business and it’s helpful to be aware of it so you can reconcile and create a plan to reduce or prevent it.

How do I start managing my inventory?

I know this feels like it could be overwhelming but one of the key things to remember is all businesses will manage their inventory differently. You can always change your approach as your business evolves and as you learn more about definitions and rules that apply to your specific business.

Instead of waiting, you may want to get started if you haven’t already. The sooner you get to it, the sooner you will see the reward and the less you will have to reconcile. These are some steps that can help to get you started.


Yes, evaluate your products, the literal count of your current stock.  You will need to figure out your current state and decide how much information you want to track. As I mentioned before, I make products and in addition to the completed items (finished products) ready for sale, I track supplies including any raw material and packaging supplies. Anything that has an impact on how and when I can get my products out to retail and wholesale customers.  This is still a work in progress for me as I have lots more research to do to finalize my list of the kinds of things that are applicable to my business as inventory. As I get more details, my process will get more robust and inclusive. A great post that has helped me realize the extent of supplies/material that can be considered inventory is this one from Paper + Spark


How will you document these counts?  Inventory management software, a spreadsheet or a manual paper count?  There is no wrong answer, you will use whatever method works best for you, at this time, in this stage of your business. My business budget is pretty low so paid software isn’t an option for me right now. I am currently using a spreadsheet that has some built-in formulas that automate SOME of the calculations. That works best for MY current state. If you are already managing your inventory, what is working well for you? Share some wisdom in the comments below.


How often will you keep track?  The more frequently you keep track, the more accurate your counts will be at any given point in time. Some inventory management software is integrated with point of sale, e-commerce stores, etc. If you’re using that kind of software your counts are probably almost 100% accurate. When I established my process I was feeling like superwoman so I vowed to update my counts EVERY DAY. I’m currently a one-woman show so let’s just say every day wasn’t very realistic FOR ME and it got really tough. I try to do it every two to three days but most importantly I have a scheduled, dedicated time every week for my counts and updating my spreadsheet. So at the very least on a weekly basis, I have an up to date, reconciled, accurate count.


Breathe. Don’t overwhelm yourself. Start where you are and do what you can. Many of you, like me, started out or may only be doing this on the side.  You don’t have unlimited time OR resources so feel free to start with a more simple approach and as you learn more you can increase your complexity. This is an important step but please don’t allow it to overwhelm you so much that you don’t do it at all. Start small and you can perfect it as it grows.

Don’t forget to check-in with your Bookkeeper or Accountant for more specific support for your business. I learned a lot from research, asking questions and reading information from industry experts. We are just getting started with Part 1. Check back weekly for additional information on Inventory Management and Resources.

With Crewdly Made, I am building and learning as I go. I am not an expert so anything shared should be validated with your business support folks (accountant, bookkeeper, attorney, etc.) Use the comments below to ask and share your experiences and things that are working for you.

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