Have you ever looked at your sales numbers and your inventory and thought, “Wait, where’s all the cash?” You’re selling, your store is busy, but somehow… your bank account doesn’t reflect it.
I’ve seen this happen again and again and I’ve been there too. You’re making sales, your store feels busy, and yet… cash flow feels tight. The truth? The answer isn’t hiding in your sales. It’s hiding in your inventory.
When I first learned that, it stopped me in my tracks. Like so many store owners, I used to think more sales would automatically mean more profit and more cash. But that’s not always true. Sometimes, we end up reinvesting those sales right back into inventory and before we know it, our cash is sitting quietly on the shelves.
Listen to the full Episode here:
Where Your Cash Is Really Sitting
When I work with store owners, one of the biggest “aha” moments is realizing that their money is sitting quietly on their shelves in the form of inventory that isn’t moving fast enough. I like to say that your inventory is a reflection of your cash flow story. If your money feels trapped, look around your store.
Are there racks or displays with items that haven’t moved in months? Those are little “cash prisoners.” They represent dollars you’ve already spent, dollars that could be working for you if they were freed up and flowing again.
Even if your sales are strong, if your inventory isn’t turning quickly enough, you’ll feel the pinch. It’s like having a garden that’s overgrown. You might be watering it faithfully, but if it’s too crowded, nothing can really thrive.
This is where understanding your inventory turn changes everything.
How to Check Your Inventory Turn and Freshness
I promise, this isn’t complicated, once you know your numbers, it’s like flipping on a light switch.
- Step 1: Calculate your Inventory Turn
Take your annual sales and divide them by your average inventory. That number tells you how many times you sold through your inventory last year, your turn.
Cathy recommends aiming for a turn of 3: That’s the sweet spot where inventory flows smoothly through your store, not sitting too long, and not selling out too fast.
Keep in mind that some inventory classes may turn faster than others. High-ticket or seasonal items might move more slowly, while lower-priced or trend-driven categories might turn quicker. What you’re looking for here is your store’s full average.
- Step 2: Calculate your Freshness
Now, look at your new receipts from the last 90 days and divide that by your total inventory on hand (at retail). That percentage shows how much of your inventory is new and how much is old product taking up space and cash.
Cathy recommends keeping about 70% of your inventory fresh at any time. That’s your Goldilocks zone, just the right balance to keep customers excited and your cash flowing.
If your store’s energy feels flat or your cash feels stuck, your percentage of newness might be lower than you’d like. Time to freshen up your tub and get your inventory working for you again!
Fresh Inventory = Fresh Energy
When your inventory turns faster, everything else starts flowing too. Your cash flow improves and displays feel alive again. Your customers notice the newness. And your team feels more energized and proud of the space they’re part of.
Fresh products don’t just bring in sales, it brings back momentum.
When I coach retailers, I always remind them: you don’t have to buy more to make more. You just have to buy better. Let your inventory work for you, not against you. Every decision you make about what to bring in, what to mark down, and what to feature is part of keeping that flow alive.
And once you find that rhythm, when inventory moves in harmony with your sales, your cash flow becomes so much easier to manage. You’ll finally feel like your business is breathing freely again.
Watch the full Episode in YouTube:
Your Millie Moment
Want to see where your profit potential is hiding? Here’s your homework from Cathy:
- Calculate your inventory turn for last year, take your annual sales and divide them by your average inventory.
- Then, check your freshness today, look at how many dollars (or units) you’ve received in the last 90 days and divide that by your total on-hand inventory.
These two numbers tell the story of how hard your inventory is working for you and where your next profit breakthrough is waiting.
Resources & Links
- Episode 029: Want to Scale Your Retail Business. Fix This First
- Episode 035: Encore: The Hidden Cost of Inventory Hoarding
- Episode 010: How to Identify and Eliminate “Cash Flow Eaters” in Inventory
- Episode 013: How to Stay Ahead of Retail Cash Flow Challenges: 2 Strategies for Success
- Is your turn and freshness not where it should be? In our Profit Club program we can identify the slow movers, create a plan for moving them out, and determine what inventory to replace it with to make your inventory fresh & profitable. Apply for your free Gameplan Call, where we’ll identify your growth opportunities and map out the most profitable next steps to elevate your visibility, attract the right customers, and scale with confidence.
- Follow us on social media for more updates! Facebook / Instagram
Don’t forget to join us in our community: Richer Retailer Facebook Group.
Remember
💚 Remember: You’re not stuck, you’re just one smart decision away from freeing your cash and reigniting your store’s energy. Every time you understand your numbers and take action, you’re building the confidence and control that every thriving retailer needs. Keep going, your next breakthrough might be sitting right there on your shelves.
