Inventory Genius Part Two (ep 109)Jan 17, 2023
So how does inventory work in your product-based business?
The importance of inventory is so overlooked. It's the life-blood of a product-based business. It will either load you down with debt or create a surplus of cash.
100% of the business owners who jump on a consult call with me have inventory. And over 90% of them don't know how much they own without pulling up their point of sale (and even then, most of them can't find the number or have never looked before).
If this is you, there's absolutely no shame in this! I love a good mess - and I've totally been there. You always have to start somewhere. There's no mess too big to tackle.
4 out of 5 categories on a financial statement are inventory based. Here they are:
2. Cost of Goods Sold
4. Net Profit
Expenses is the only category not directly tied to inventory, and our expense category is fixed and non-fixed expenses. It doesn't include debt.
Let's dig into each of these categories and how they connect to inventory:
Sales: if we have the right inventory and the right amount of inventory, we'll make our sales goals (well, add traffic to that mix too).
Cost of Good Sold: oftentimes inventory isn't correctly included - it's only the cost of goods that have actually sold (not what you also have on hand).
Margin: it's the difference between sales and cost of goods sold. This number is so important and we dig into it a lot in the Inventory Genius method. We often tap into margin first. Raise your margin and improve your profitability.
Net Profit: if we don't have the sales we need or if we're not seeing the margin we need (or both!), we won't see a net profit. Our net profit is a direct reflection of what is happening up top on the profit and loss statement.
Here's your next assignment:
Look at where you are with your salary today, look at where you want to be 12 months from now, and look at these five categories. Decide which of these categories is going to get you where you want to be in 12 months.
All five categories are important, but which one will you start with?
Also, the next round of my top-tier 6-month mastermind program is on the horizon. I'm only opening it to 30 people, and spots will fill fast. If you want to be one of the first to be considered, please join the waitlist. There's no obligation, but you'll get advanced notice of when the spots open. Join here.
Here's a glance at the episode:
[2:50] Ciara talks how inventory works in your product-based business
[4:45] It's the life-blood of a product-based business. It will either load you down with debt or create a surplus of cash.
[10:00] An assignment for you!
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