Some of the Top Reasons for Holding Stock

In today’s article, we will give you the reasons for holding stock. For you to have ownership of a share, you need to hold stock.  You may want to ask, what are the reasons why I should take stock? How can holding stock be of any benefit to me? Is it necessary to do inventory? And so on. We will answer all of these questions in this post.

reasons for holding stock

What is holding a stock?

You will find the key reason for holding stock in the definition of Stock-holding. We define it as the act of owning a property with the aim of generating revenue. Therefore,  generating revenue is the primary reason for holding stock.

Let’s be truthful to ourselves, we all love money. Therefore, before we can venture into any business we will first ask this common question. How much can I make from it?  If you think about starting a business, and this question crosses your mind, your aim will be to generate revenue.

Reasons for holding stock

The following are the reasons for stock-holding;

  1. Promote customer service

In business, you serve your customers be it an enterprise, an online app, or even software. They all require different services to the customer. Part the reasons for holding stock is that it will make it easy for you to meet the demands of your customer better. When you take stock, you will discover some lapses that are related to your customer. It will help you address and fix them on time. This will promote your customer service.

  1. Make full loads and reduce transport costs

When you know the quantity of stock you need, you can hold stock. Holding stock helps you to produce more and be sure it will not be exceeded.  These are good reasons for holding stock. And not even that, it saves cost. Instead of delivering it bit by bit, you are able to deliver goods to your buyer at once. This will save you money you would have spent transporting your products in bits.

  1. For Emergencies

Other fantastic reasons for holding stock includes managing emergencies. For example, when a particular product is out of stock in the warehouse, holding stock will help you take note of this product. And when your clients are now in need of this product, you can easily rely on the stock you held to solve the problem.

  1. Quicker response time

When you hold stock, this will help you to arrange your products properly. Similarly, putting the product in the right place will enable you to have quick access to it when you need it. Therefore, quicker response time is achieved when you have quick access.

  1. Decreased risk of shortages

Shortages in a particular product can cause you to lose a potential customer. Thereby pushing them to go to your competitors. But with proper stock holding, your products will not go out of stock. these are fine reasons for holding stock.

  1. Avoids loss of sales

Holding stock prevents any loss of sales. Because you are able to meet your customers needs anytime they come to you,  this will make them happy and continue to buy from you.  This will naturally, increase your sales.

  1. Achieve efficient production runs

Holding stocks makes your production materials always available. Availability of materials are reasons for holding stock. Without production materials, manufacturing will not take place. With stock holding, you know when the next material will be out of stock. And you plan towards it.

Types of stock

  1. Raw material: -This is taking total stocks from your suppliers.
  2. Work in progress: – This is taking the stocks of your operation, by trying to know how many goods are yet to be finished.
  3. Finished goods: – This is dealing with already finished goods to be sent to your customers.

Benefit for holding a stock

The following are the benefit for stock-holding:

  1. To generate revenue

Generation of revenue is part of the reasons for holding stock  We all know the importance of revenue which helps you to provide for your wants. Before anyone gets into business, he or she must be sure that the business will yield increase or generate revenue.  When you are in business, holding stock will give you the benefit of having enough resources to meet your business needs from profits which you keep in reserve on a monthly basis.

  1. It is a long time investment

One of the good things about holding a stock is that it is a long time thing. It will help you to have this assurance that this business is secure for life. And that the business will equally benefit your family and friends. In addition, the risk of being unemployed does not apply to you.


In conclusion, it is beneficial to hold stock. Looking the reasons for holding stock we listed above,  you will agree with me, that holding stock will promote your business, enable you to meet your customer’s needs and help you to grow your business. Also, holding stock will keep you in a happy state of mind.


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