Choosing inventory software for a craft business can be a daunting task. There are dozens of inventory software packages to choose from, and it can be difficult to determine what needs to be tracked. Inventory software can help facilitate the running of your business by alerting you when you need to re-order raw materials and when you are running low on finished products. It can also track all of the details you need for the Cost of Goods Sold (COGS) part of your tax accounting for your federal and state taxes. And some inventory software can help you deal with selling goods in multiple currencies.
Before you start shopping for software, determine what you need to track. It may help to talk to your accountant or tax preparer. Financial website, The Balance points out that “there are no laws that require you to implement or maintain an inventory tracking system.” If you need to maintain an inventory of raw materials or components that you use to produce finished products, “you may need inventory tracking to help you ensure that you have sufficient materials on hand to produce the items you will need to meet your customers’ demands.”
This information is also needed for COGS, which are the direct costs involved in the production of making goods sold by a company. Investopedia explains, “There are several ways to calculate COGS but one of the more basic ways is to start with the beginning inventory for the period and add the total amount of purchases made during the period, and then deduct the ending inventory.”
In addition to the items you are required to track, there may be other items that would be useful to account for on an ongoing basis. Some makers want to track where the finished products are. This is useful if you sell in multiple stores or consignment shops, from your own studio, from your mobile inventory that travels with you to shows, or if you have an online marketplace. Or maybe you would like to have your point-of-sale software “talk” to your inventory software so that your sales are tracked on your inventory spreadsheet.
Etsy provides a long list of companies that offer inventory applications and products that work with their platform. Three of the main companies that have created software specifically for craft businesses are:
Various sections of the Craftybase software.
Photos from Craftybase.com
Nicole Pascoe at Craftybase explains that their bookkeeping and inventory software package “tracks both material and product stock levels while calculating COGS to make things super simple come tax time.” They also offer pricing suggestions based on your current cost of materials and your desired mark-ups.”
Craftybase works seamlessly with Etsy, Paypal, Shopify, and Square, and they offer separate software packages for soapmaking supplies, jewelry inventory, and cake baking supplies. The website also provides a software comparison section to GoDaddyBookkeeping, Quickbooks Self-Employed, Jewelry Designer Manager, Bead Manager Pro, Craft Maker Pro, and Cake Boss so that you can evaluate costs and features.
Various sections of the Craft Maker Pro software.
Photos from CraftMakerPro.com
A spokesperson at Craft Maker Pro said the main difference in their software is that it “can manage three-dimensional inventory, such as clay, wood, paper, and fabric.” They also have an Etsy calculator. Craft Maker Pro’s tag line is “Helping Crafters Make a Profit.” They offer more than two dozen online tutorials on how to use their product.
Various sections of the Paper + Spark spreadsheets and supporting materials.
Photos from PaperandSpark.com
Janet LeBlanc, founder of Paper + Spark, is a certified public accountant, a former accounting teacher, and a maker. She has been selling, “everything from handcrafted jewelry to personalized stationery on Etsy, and locally, since 2011.” She’s well-versed in both the maker side and the financial side of running a creative business. She explains, “In 2014, I decided to utilize my accounting and finance experience to help other artists feel more confident about somewhat challenging concepts like bookkeeping, taxes, and finances with Paper + Spark. Since then, I’ve been designing spreadsheet templates, courses, and other education content that empowers creative entrepreneurs with the knowledge necessary to confidently handle their money.”
LeBlanc said that one thing that sets her spreadsheets apart from other inventory software is the one-time, budget friendly price of $43, which includes lifetime updates. She also provides video tutorials—a helpful resource since crafters and artists tend to be visual learners. She said, “With all of my spreadsheet tutorials, you aren’t just learning how to use the tool, you’re learning the tax and accounting concepts you need to know as a business owner.”
The reason Paper + Spark sells spreadsheets, instead of software, is because “software feels bulky and can have a big learning curve…Software can also be susceptible to errors that we can’t catch or are often unaware of,” LeBlanc says. She admits that the spreadsheet requires more manual work than software and it has fewer bells and whistles.
LeBlanc uses her own spreadsheets in her businesses and she is willing to work with her customers and answer their questions herself. “What’s important at the end of the day is that you’re actually using an inventory management system and keeping it up-to-date. Too many makers don’t understand that they need to be tracking inventory, and that’s where the trouble really begins.”
When selecting inventory tracking software, make a list of your business priorities and balance price, functionality and ease of use so that you can select the product that it works for your particular business.