Let’s say it out loud: dead inventory is a silent killer.
You don’t always see it. You don’t always feel it. But it quietly piles up in the back room, the warehouse, or on that “we’ll move it eventually” shelf. By the time you realize how much money is tied up in unsold stock, you’ve already lost the chance to course-correct. That’s why now—mid-year—is the perfect moment. It’s the ideal time to take a hard look at your inventory, clean house, and build a smarter sales strategy before the holiday chaos or another round of supply chain unpredictability rolls in.
Why does this matter more in 2025? The past few years haven’t exactly been inventory-friendly. With rising holding costs, tariff uncertainty, port delays, shifting consumer demand, and leftover stockpiling, many businesses are sitting on more inventory than they planned and less liquidity than they need. The good news? Slow-moving stock doesn’t have to become dead inventory if you catch it early and act now.
The Mid-Year Inventory Assessment Checklist: Your Guide to a Healthier Business
To get your inventory under control, you need a plan. Use this step-by-step checklist to identify problems and create a strategy that boosts your profits.
1. Do a Physical Inventory Count
This is a non-negotiable first step. Yes, you need to physically count your stock. Don’t rely on what’s “supposed to be there” in your system. A physical count provides a critical reality check. If your records say you have 25 units but you only have two, your purchasing decisions are already based on fiction. By getting an accurate physical count, you stop making decisions based on false data and start planning for what you actually have. This process reveals discrepancies caused by theft, damage, or human error, which are crucial to address.
2. Run a Sales Velocity Report
Once you know what you have, the next step is to understand what’s moving—and what isn’t. A sales velocity report measures how quickly items are selling. This report helps you identify slow-moving products—typically anything that hasn’t sold in 90 to 180 days. Consider this a crucial baseline. If an item hasn’t sold in three to six months, it’s not “inventory”—it’s overhead. The sooner you identify these items, the sooner you can address the problem and free up capital.
3. Understand the Hidden Costs of Holding Inventory
Slow-moving inventory does more than just tie up your cash flow. It costs you money in ways you might not be thinking about. These hidden costs include:
- Wasted space: The longer an item sits on a shelf, the more valuable space it occupies, space you could use for faster-selling products.
- Increased insurance and storage costs: You are paying to store and insure every single item in your warehouse, even the ones that aren’t generating revenue.
- Higher risk: The longer inventory sits, the higher the risk of it becoming damaged, obsolete, or even stolen.
- Reduced efficiency: Slow-moving stock can make your operations less efficient, slowing down your ability to stock and sell higher-margin items.
Every day an item sits unsold, its value erodes, and its associated costs accumulate. The longer you hold on to something that isn’t selling, the more it costs you, even if you’ve already paid for it.
From Problem to Profit: Your Dead Stock Exit Strategy
Once you’ve identified your problem areas, it’s time to take action. Don’t let your old inventory drag you down.
4. Identify the Real Dead Stock
Time to be honest. What’s expired, outdated, out-of-season, or simply never resonated with customers? If an item has been through multiple sales cycles and still hasn’t moved, it’s time to cut your losses. A good rule of thumb is to flag any inventory that hasn’t sold in over six months and isn’t seasonal. Even if you “love” a product, your customers clearly don’t. Acknowledging this reality is the first step toward reclaiming your profits.
5. Plan Smart Promotions (or Exit Strategies)
You don’t have to fire-sale everything at a massive loss. There are smarter ways to move stagnant inventory:
- Bundle slow movers with your most popular, high-margin products.
- Run a limited flash sale or a “buy one, get one” offer to create urgency.
- Offer VIP-only promos or loyalty perks to your best customers.
- Repackage or reposition stagnant items to make them feel new and exciting.
And if it still doesn’t move after these efforts? Consider more drastic actions. Donating old inventory can offer a potential tax deduction, while liquidating it can at least recoup some of your costs. You can also look into repurposing items for a new use before they collect any more dust and eat into your margins.
6. Use What You Learn to Forecast Smarter
Every item that isn’t moving has a story to tell. Was it a trend that passed? Did demand change? Did your supplier push a product you didn’t really need? The answers to these questions are invaluable. Use this insight to improve your buying decisions and forecasting for the rest of the year. You can learn to order closer to demand, reduce your risk of overstocking, and improve cash flow by prioritizing what sells now, not what might sell someday.
A Final, Critical Check: The Inventory Turnover Ratio
If you’re a numbers person, you should start tracking your inventory turnover ratio. This metric shows how often your inventory is sold and replaced over a year. A low turnover ratio means your cash is stuck in products, while a high turnover ratio indicates better cash flow and margins. Even a basic understanding of what moves fastest can help you prioritize smarter reordering and promotions. This simple ratio provides a powerful snapshot of your business’s financial health.
Ultimately, you should control your inventory; it should not control you. Whether you’re a small business shipping out of a garage or managing multiple warehouses, this mid-year check-up is your chance to get clear on what’s working and what’s dragging you down. By the time December hits, it’s too late to fix a slow-moving problem that started in July.
Don’t let your inventory dictate your business’s success. Need a second set of eyes on your inventory strategy? We help business owners like you review inventory performance, spot financial opportunities, and build proactive plans that protect your profits year-round.
Let’s assess, adjust, and make your inventory work harder for you. Contact our office today to get started.