3 Mistakes SMEs Make When it Comes to Inventory Management and Protection

The months leading up to officially launching your new SME are going to be quite daunting. Over and over again, you’re going to be thinking to yourself: ‘just don’t make any mistakes’. And, indeed, if you plan well enough, you can drastically cut down on the number of mistakes you make. The truth is, however, you’re still going to make some. 

Mistakes are part of the process, and it’s where some of your best lessons will come from. The key isn’t perfection, it’s preparation, and in those early months, your job is to not only minimise the avoidable mistakes, but plan for how you respond to the inevitable ones.

Let’s look at inventory management as an example. You can spend a substantial amount of time trying to ensure you don’t make any mistakes in this area, but even the best-laid plans can go sideways. The real mistake, then, is failing to recognise this, and as a result, failing to prepare yourself. 

Across the globe, SMEs constantly make mistakes when it comes to inventory management and protection, so it’s your job to recognise those mistakes and prepare for them effectively. With this in mind, here are three of the most common mistakes and how you can protect your business in the event they happen to you.

No Protection Against Loss or Damage

While many businesses are busy trying to minimise the chances of theft, fire, or water damage, the same businesses are operating entirely without insurance. 

We can’t stress this enough: insurance is important, people! You can try as hard as you can to protect your premises, but unforeseen incidents always happen, and without the right insurance in place, just one can undo everything you’ve built. 

It’s not like there aren’t any good, affordable options out there. In 2025, commercial property insurance from Next Insurance is one of the best for flexible, tailored protection, offering coverage that can adapt to your specific needs without breaking the bank. This will help you to cover repair or replacement costs, protect your cash flow, support any legal defence costs, and reimburse inventory losses so you’re not starting from scratch. 

No Tech for Inventory Tracking

Another thing many businesses try to do is try to minimise the risk of mistakes in inventory tracking. But they do this without actually looking at their inventory tracking system. 

New SMEs, specifically, often rely on spreadsheets or manual systems to track their stock levels. This often leads to mismatched records, misplaced items, or selling out of products without knowing it – damaging customer trust and sales, which can be crucial for securing loyalty. 

The solution here is to invest early in inventory management software, ensuring you’re working on a system that provides real-time tracking and alerts you when stock is low. Even simple cloud-based tools can automate a lot of the manual work, so make sure you reduce human error by applying tech to your process.

No Backup Plan for Suppliers

One last big mistake is not having a backup plan for supplier issues. When building up to launch, a lot of companies work on attaining good, reliable suppliers, ensuring there are no problems such as delayed products or quality inconsistencies. 

But it’s important to remember that even the most reliable supplier can let you down. Maybe their shipment gets held up at customs, or maybe they go out of business entirely. If your entire inventory strategy hinges on that one supplier, all of your risk management goes out of the window if something goes wrong. That’s why it’s important to have a backup plan. Don’t just have one go-to, build relationships with at least one or two backup vendors for each key product. 

You should also keep a safety stock buffer, ensuring you have a small cushion of key inventory, and if delays do happen, you should know ahead of time how you’re going to communicate with customers to avoid frustration. As mentioned at the beginning of this article, mistakes can always happen in inventory management, so it’s up to you to have necessary protections like this in place for when they do.