Good record keeping is essential to the success of a business. An accurate record of inventory is necessary for taxes, accounting, projected income and business plans. If you want to apply for a business loan, you'll need to know the size of your inventory. An effective inventory system is one that assigns a unique inventory number to each item in your product catalog. With unique inventory numbers that are sequential, you'll be able to tell at a glance how much is in your inventory.

Choose a numbering system for your inventory. Inventory numbering systems can be numerical, alphanumerical or by category. For example, you could number your items from 1 to x in a numerical numbering system, or you could number them A1 through Ax to Z1 through Ax. Assigning a numerical numbering system is helpful if you have separate categories to inventory, like computers, books and office supplies.

Add a subcategory to your inventory system if it makes sense for your business. For example, you may sell two different brands of computers. If you have decided to label all computers A1 through Ax, you could use AA1 through AAx for brand 1 and AB1 through ABx for brand 2.

Assign a separate number to each item in your inventory, even if the items are identical. For example, if you have 100 identical widgets, each of the 100 widgets should be given an inventory number.

When you receive a new item or sell an item, record the inventory number and item in your system. Do not skip numbers. For example, if you have used numbers A1 to A101 in your numbering system, the next item should be numbered A102.


An exception to the one number per item rule can be found in some computerized inventory systems. If your software assigns stock keeping units (SKUs), similar items have the same SKU and are tracked by the quantity entered.