The Secret Power of SKUs: Organizing Your Business Behind the Scenes

Week 15 - SKU - Stock Keeping Units: Haff Notes 52-Week Business in Plain English Challenge

Welcome to Week 15 of our BRAVE Business in Plain English Challenge! Last week, we explored how powerful product descriptions can create emotional connections with your customers.

This week, we're diving into something that might sound a bit technical but will absolutely save your sanity: Stock Keeping Units (SKUs).

💡 A well-designed SKU system doesn't just help you track inventory—it can save you time, reduce errors, and make your business run more smoothly even during your busiest seasons.

New to the Haff Notes Business in Plain English series? You can catch up on all previous articles in the archive at haffnotes.substack.com where each article builds on the last to help you create your comprehensive business plan.

What Exactly Is a SKU?

Let's start with the basics—SKU stands for Stock Keeping Unit. It's essentially a unique code you assign to each product you sell to help track and organize your inventory.

SKUs are not barcodes (UPC). Barcodes are issued by an agency and only consist of numbers. SKUs are all yours and can consist of letters and numbers.

Sourced from efrancespaper.com - I’m a huge fan of their greeting cards and note cards. Check them out (and we sell them at The Islander) - whimsical, fun, and imminently heartwarming.

Examples of SKUs in Everyday Products

Let's look at how some familiar brands use SKUs:

Apple Products*: Take a look at an Apple product box, and you'll find something like "MHXH3LL/A" for an iPhone. Apple's SKUs are packed with information:

• The first character indicates the product type

• The next characters show the model and configuration

• The "LL" indicates the language/region (US English)

• The final letter is the generation or version

*This is just a general idea for Apple from background research.

LEGO Sets: LEGO uses a straightforward numerical system - for example, "Set #75192" for the Star Wars Millennium Falcon. Simple, but effective for their thousands of different sets.

Why SKUs Matter More Than You Think

I didn't fully appreciate the importance of a good SKU system until we started expanding beyond our original 22 candle products. What began as "oh, I'll just remember which fragrance is which" quickly turned into a genuine business need.

Here's where it got real for us: we're planning to put our SKUs on the bottom label of each candle. By the end of this year, those bottom labels will also have barcodes (which unfortunately we can't customize). We needed some clear way to quickly identify which label belongs to which candle when we're in the middle of production or fulfillment. That's the moment when SKUs transformed from a "nice-to-have" into an absolute "must-have" for our business.

A well-designed SKU system:

• Makes inventory management so much easier (especially when you're tired)

• Speeds up order fulfillment (critical during busy seasons)

• Reduces errors when processing orders (no more shipping the wrong product!)

• Helps track product performance (which items sell best)

• Makes communication with retailers or suppliers crystal clear

Think of SKUs as the secret organizational system that
keeps your business running smoothly behind the scenes.

Creating SKUs That Actually Help You

💡 The key to effective SKUs is creating a system that makes sense to YOU on your busiest, most exhausted day.

Imagine this: It's 10 PM, you have a big order to fulfill before tomorrow's shipping deadline, and you're running on coffee and determination. You're looking at an order sheet with a list of SKUs. Will you be able to quickly identify exactly which products you need to pull?

Here's how we redesigned our SKUs for Wanderlux to make them truly useful:

1. Brand identifier: WL for Wanderlux (immediately tells me which brand)

2. Geographic identifier: AK for Alaska (helps sort by collection)

3. Fragrance abbreviation: GL for "The Glow" (quick reference to the scent)

4. Size indicator: 65 for 6.5 oz candles (future-proofed for different sizes)

So a complete SKU might look like: WLAKGL65 (I don’t prefer hyphens in my SKUS but that’s just a personal preference).

Sourced from: wanderluxcandles.com

This system means that when I'm tired and fulfilling orders, I can quickly scan across labels and order sheets and know exactly what I'm working with. I can sort products by brand, collection, fragrance, or size with just a glance. Trust me, your future exhausted self will thank you for thinking this through now!

Examples Across Different Businesses

SKU systems work for any type of business, just adapt them to fit your needs:

For a jewelry designer: Her SKU system looks like:

• JE (jewelry type: earrings)

• GF (material: gold-filled)

• HO (design: hoops)

• SM (size: small)

So a small pair of gold-filled hoop earrings could be: JE-GF-HO-SM

This allows her to quickly identify exactly which pieces she needs to pack when fulfilling orders, even when items look similar.

For a nutrition coach: Her digital product SKUs include:

• NC (nutrition coaching)

• BG (beginners guide)

• 4W (4-week program)

• DG (digital delivery)

Her complete SKU for a digital beginners guide to nutrition with a 4-week plan would be: NC-BG-4W-DG

This helps her track which programs are selling best and ensures clients receive the correct materials.

For a woodworker: His custom furniture SKUs include:

• FN (furniture category)

• CT (item: coffee table)

• WL (wood type: walnut)

• 48 (length: 48 inches)

A 48-inch walnut coffee table would be labeled: FN-CT-WL-48

This system helps him track materials, dimensions, and project types, making it easier to order supplies and schedule productions.

Tips for Creating Your Own SKU System

1. Keep it logical: Create categories that make sense for your specific products

2. Be consistent: Once you establish your system, stick with it

3. Think ahead: Consider future product expansions when designing your system

4. Make it scannable: Your tired brain should be able to quickly parse information

5. Document it: Create a simple guide explaining your SKU structure (especially if others help with your business)

➡️ Most importantly - make sure your SKU system works for you.

Your Action Steps This Week:

1. Review your current inventory tracking:

   • How do you currently keep track of different products?

   • What problems or confusion do you experience?

2. Design your SKU system:

   • Identify 3-4 key categories that would help you distinguish products

   • Create simple abbreviations for each category

   • Test the system by coding a few of your products

3. Implement your system:

   • Update your inventory list with new SKUs

   • Add SKUs to your product labels or packaging

   • Use SKUs in your order forms and invoices

Next week, we'll explore another essential business asset: your tech stack—the collection of software and digital tools that can make your business run more smoothly. This is an aspect of asset building in your business that most people don’t stop to think about - how all of your tech solutions interact and how to maximize your return on investment with each service you add on.

Here's to building a business you love to own,