How to Financially Survive Holiday Inventory Prep

Inventory and Cashflow During the Holidays: At Peace With Money

The holiday season is fast approaching, with Halloween on the way this week. With this season comes the time forstocking up your inventory. You want to make sure you have plenty of product available for when shopping season begins! The challenge of this time of year is that you want to build up your inventory while still having cashflow. That is, manage your financial responsibilities while increasing your spending on supplies. This can be a difficult balancing act for solopreneurs, so I’ve made a quick list of tips to get you through your holiday prep safe and financially sound!

Holiday Inventory Prep Tips

  • If you’re taking orders, consider securing a deposit from your customer so you can pay for the supplies before production.

 

  • Buy wholesale! Make sure you’re not paying sales tax for materials your plan to resell. This will likely require that you obtain a resellers permit for your state, so be sure to check. Negotiate the best terms with your suppliers. Can you get a discount for buying in bulk?  Will they give you net 30 or even net 60 payment terms, meaning you can receive the items now but not have to pay for them until later? If you find yourself feeling nervous about asking these things of your suppliers, please check out my article on rejection therapy for a little inspiration, then pick up the phone and stick up for your business!
  • Increase the dollar amount of each sale. For example, when I ran my jewelry business, I was able to do this by selling sets of jewelry. I would sell a pendant combined with a pair of earrings, making it easier for customers to make the decision to spend more money at my business. Even though I gave a small discount, I still increased my sales, and my profit!

Manage Cashflow and Inventory: At Peace With Money

  • Do you know your best-selling item? Make sure you have plenty on hand for the holidays! This will increase profits come shopping time.
  • When it’s all over, use a portion of your profit account to celebrate. You’ve worked hard during the holiday season. Make sure you reward yourself. To learn more about a profit account, I recommend downloading the first 5 chapters of the Profit First book on my website.

If you have more questions about balancing inventory and cashflow, don’t hesitate to schedule a discovery call with me! 

If you want to read more about the issues of inventory vs. cash flow, I recommend checking out my articles “Why Selling More Doesn’t Mean Making More” and “The Stages of Financially Growing a Business.”

Angela

 

Image Sources: Drew Beamer , Annie Spratt

Why Selling More Doesn’t Mean Making More

I assume that when you started your business, you wanted to put money in your pocket. Whether your goal for that money is to use it to fully support yourself or your family, or to fund a particular life goal, your business is meant to supply you with money.  As such, making money by selling product is often the business owner’s most common focus. Enter, the hustle timeline.

The Hustle Timeline

When we first start a business we have to get out there and hustle to sell something; to get things moving. Eventually we start rolling. But at some point we want to make more money, and we believe that growing our business is the way to make more profit.

So, we hustle some more. We do more gigs, we move more product, we sign on more clients. There is more money coming in, but there still doesn’t seem to be enough. Then we set our sights on a particular goal, the gig, the number, the client that’s big enough to put us over the edge so we can put more in our pocket. But it never really happens. Here we find ourselves trapped in the timeline; always hustling, and never quite reaching our goals.

The Answer

There are only two ways to put more money in your pocket: increase margins or decrease expenses. If we are using the same labor, materials or processes as we increase sales we are increasing our output, but not gaining anything. Perhaps we may have even added to our spending to buy that new printer or new app to handle the increase in sales volume. If we haven’t examined our spending, we aren’t gaining anything. Taking a good look at our margins and our business expenses is an important step to upping the profits of our business. 

Why Selling More Doesn't Mean Making More: At Peace With Money

To examine your expenses and profit margins, ask yourself these questions. Is your product or service priced appropriately, or are you undervaluing it? Comparing your prices industry standards can help you suss out an answer. So can calculating in materials, labor, and other costs. If you’re unsure how to price your product or service, do some research to get other opinions and methods!

Are you delivering your product or service in an efficient manner, or are there places you could cut time and expenses? Look at your processes, and be discerning. Have you reviewed your business expenses lately to see if it’s really all necessary?

Ask yourself these questions and review the inner workings of your business. This is where your profit is hiding. Let’s get it into your pocket.

Angela

Image Sources:  Roman Kraft ,  Nik MacMillan

How To Pay Yourself First

How To Pay Yourself First: At Peace With MoneyI use the hashtag #PayYourselfFirst all the time, but what does it really mean to pay yourself first? It’s a core aspect of Profit First philosophy. It’s also an important part of how I organize my own personal finances. I want to make sure all my readers know how to pay themselves first, in their business and personal finances, so let’s dive in.

Keep What You Earn

“Paying yourself first” is about having a system in place to make sure that you get to keep a portion of your earnings. In my last post on automation, I talked about David Bach’s book, The Automatic Millionaire. Bach includes the concept of paying yourself first in this book and applies it to personal finances. He suggests setting aside savings right off the top of every paycheck, even before breaking it down for living expenses. Users of this system do quite literally pay themselves first! In his system, the money goes to retirement savings accounts, but the system can be adjusted in both business and personal finances to fit your own needs.  Taking a cut for yourself from each paycheck is and important but easily forgotten practice.

Beyond Corporate

So, how does this apply to solopreneurs? If you’re working outside the corporate world, you’re probably working without health and retirement benefits. This is all the more reason to set up a system to take care of these needs. Setting aside money to address health and retirement costs is important for many people, but especially so if your main source of funding for both is your own business. 

How to Pay Yourself First: At Peace With Money

I always say I want to help my clients work with the Profit First system to align their business profits with their life goals, and I assume one of those goals is to support yourself in your health and retirement! Every financial aspect of your business can be set up with this in mind. Your products should be priced appropriately so that you earn something for yourself, rather than just simply covering costs. A part of that money should be invested into your future and your healthcare fund. This is the Profit First system at its core. This is what I want to help solopreneurs work towards with their businesses.

Take a look at your personal and business money systems and ask yourself, do you pay yourself first? Are you setting aside money to support and reward yourself? If you’re interested in more on this topic, I highly suggest downloading the first 5 chapters of the Profit First book through my website.

 

Angela

Image Sources:  Alisa Anton, zixuan Fu

The Cash Flow Problem Facing Healthy Businesses

business desk with flowersIt’s great to have a healthy cash flow, but a cash flow without a plan? Not so great. Lacking a plan when it comes to managing cash flow can definitely cause problems.

Let’s say Barbara owns a business. She makes a nice cash flow every month. She pays herself a high salary and maintains a fun, comfortable lifestyle. Barbara also has a large monthly payment for last year’s taxes, past-due vendor bills, and every week she scrambles to make payroll. Barbara makes her decisions based on the fact that the money just keeps flowing. This is bank-balance accounting. It’s a stressful game that is played almost weekly, with a few sleepless nights here and there.  

What if Barbara had a plan for all of that cash coming in? What if she actually allocated some portion of it to work in her business, some portion to pay taxes, and a portion to pay for her lifestyle? With a bit of planning anHow to Manage Cash Flow At Peace With Moneyd a few adjustments to her habit of treating her cashflow like a personal piggybank, her business would be much less stressful.

Profit First is that cash flow management system. This is the methodology I specialize in helping small businesses implement. You can schedule a call with me for a discovery chat about Profit First, or read up on the system here.

Angela

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By |2018-03-05T19:51:16+00:00March 5th, 2018|Categories: Cash Flow|Tags: , , , |0 Comments