How can I go about creating an inventory system where none previously
Existed for a small clothing store?

Excel is a good place to start.

Google "Inventory Control". Loads of ways to do it.

Even your very basic accounting software will allow you to do this

Start by performing a physical inventory count to establish your beginning inventory. Then track your inventory as it is received and as you sell it. If you're not using accounting software, or are using software without an inventory module, I recommend that you switch to software that does track inventory. If the business isn't large enough to be using a point of sale system that will assist with tracking items as they're sold, you'll have to adjust your quantities by hand (so to speak) by doing an inventory count fairly regularly.

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Originally Posted by jerileycpa

Start by performing a physical inventory count to establish your beginning inventory. Then track your inventory as it is received and as you sell it. If you're not using accounting software, or are using software without an inventory module, I recommend that you switch to software that does track inventory. If the business isn't large enough to be using a point of sale system that will assist with tracking items as they're sold, you'll have to adjust your quantities by hand (so to speak) by doing an inventory count fairly regularly.

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Thank you so much for your answer. Would this mean I am basically starting from 'scratch' with no way to determine what my sales or inventory prior to this should be?

Pretty much. If you haven't been keeping track of your inventory prior to this point, the only way you would know what your current inventory should be is to go back to the very beginning of when you started your business and research all of your inventory purchases and your sales and create a spreadsheet or something similar to record the ins and outs of the items that you sell. That would bring you up to date. Then you would be able to determine if you were experiencing any inventory shrinkage (meaning theft or loss of your inventory).