Female business leaders professionally chatting about inventory

Growth Story: Tiffany

Growth Story: Tiffany; how she took control of her business

Do you look at your end of the month statements and wonder where the money is going? You might have no idea where to begin to stop the bleeding of cash flow. You are not alone! Tiffany felt the same way before joining Clearinity 6 months ago.

Tiffany has grossed $5 million per year in sales after just 5 years in business. A huge accomplishment! Yet, she was scrambling to bring in actual profit and she constantly had recurring inventory problems. She was a multi-channel seller that had gone through a slew of team members in 5 years. Tiffany was exhausted!

At Clearinity we look at the source of your problems. We started Tiffany out with assessing the maturity of her business. We found with Tiffany, by tackling her inventory problems we brought her from a stage 3 maturity to a stage 5 maturity.

Maybe you are Tiffany. Maybe you are the exhausted CEO that has given their power to their staff only to be disappointed. Maybe you aren’t, in that case, check out Tyler, Trip, and Tara’s story.

If you resonate with Tiffany, keep reading our ten most common mistakes ecommerce business owners make.

    

Use SKUs properly

  • Impact: 4/10

  • Timeline to resolution: 0  – daily maintenance

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 5

Your warehouse manager and product manager are constantly costing you time and money by ordering the wrong amount of products. Like Tiffany, you may be a CEO that has hired more than one person just to get one job done. Implementing the right SKU software that offers flexibility as well as clarity helps track your inventory more accurately. SKUs systemize the ways we see what is selling well and what is not, making your investment into inventory less of a black hole.

Use a Purchase Order

  • Impact: 6/10

  • Timeline to resolution: 2 Day Training

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 5

You fixed up your SKUs but you still can’t pin where the extra money is disappearing too. Truth be told, your team’s buying habits are out of control and there is no record. You have tried creating systems in the past to record spending but it often gets put on the back burner. Tiffany told us “I just don’t have the time to do this” but she had a capable office manager to help with this.  So we taught the office manager the PO process and suggested Tiffany check in with her about purchase orders Bi-weekly. Her bottom line is much more accurate now.

Count your inventory regularly

  • Impact: 5/10

  • Timeline to resolution: 4 days of training

  • Ecommerce Maturity Stage WITH: 5

  • Ecommerce Maturity Stage WITHOUT: 3

According to Forbes, 76% percent of customers say that a good experience is what influences their brand loyalties. Retaining loyal customers means returning capital year after year plus more. The experience of the customer transfers from their online interface to purchasing a product and then receiving what they purchase in excellent condition. Your warehouse plays a large role in maintaining a good experience for your customers. For Tiffany, her operations team was counting once a year. Although still better than not counting, for Tiffany this often meant that she and her operations team never knew the true quantity. Once Tiffany began counting regularly, she found she had more customers returning and purchasing more products from her.

If you are a business owner that has had missing products, or incorrect items subbed for one another it’s time to start looking at your warehouse and asking if you are counting your inventory regularly. Doing this regularly means counts are more accurate and that directly transfers to your accounting team.

Product Structure 

  • Impact: 9/10

  • Timeline to resolution: 2 weeks

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 3

You sell garden pots of various sizes, colors, shapes, styles, and patterns. You also sell garden kits. You manufacture both these products. When it comes time to sort and organize what was purchased, what was made and what was sold you might feel overwhelmed. Implementing product structure allows you to better track your items for inventory purposes but also allows your accounting department to really understand where the time and thus money is being spent the most on.

Tiffany had a loose product structure in place. We helped clean up Tiffany’s product structure by looking at the RAW, WIP and FINISHED goods she produces. We categorized and organized so that the warehouse, accounting and technology teams could easily keep track of the revolving inventory.

Organize the warehouse in an efficient manner

  • Impact: 9/10

  • Timeline to resolution: 2 weeks

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 3

If you are on your third warehouse manager, this tip is for you! Organizing your inventory in your warehouse not only prevents employee stress but it also prevents future mistakes from happening. Approach this tip with your team and build a process that offers both efficiency and ease. If you are a hands-off business owner like Tiffany, working with your Warehouse and Operations Managers will help implement this process so they can continue reinforcing the process to the team. Not only are you helping your team stay happy, but we also found with Tiffany she was not spending additional resources hiring new employees all the time.

Build a team AND a process

  • Impact: 10/10

  • Timeline to resolution: 6 month leadership intensive program

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 3

You brought this company from nothing all the way up to 5 million dollars in sales. That is a huge accomplishment! Like Tiffany, you have worked hard and hired a team to do the heavy lifting now. You just don’t understand why your team is constantly falling behind in tasks and has had considerable absenteeism. It may have crossed your mind that your team just doesn’t care. We are here to remind you that is furthest from the truth and most times comes down to a lack in process. Creating teams and processes helps everyone stay on track and when one person is sick or on vacation the team knows where to pick up that person’s duties. It also prevents mistakes from happening. We helped show her valuable leadership skills as well as identify her team’s strengths so they could build a process that worked for everyone!

Add technology for long-term success, not short-term wins

  • Impact: 8/10

  • Timeline to resolution: 3 Months

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 4

We don’t want more pain in the end. After investing in a process with your team, it’s time to invest in some technology to help yourself stay organized. Short term wins are instant gratification; it may feel good now that you have a process and an understanding team on your side but until it can be managed appropriately it won’t matter.

Tiffany really took to implementing one of our suggested e-commerce inventory technology systems.  This increased her revenue by allowing herself and her team to track progress, view the health of the business, and have systems in place for every team member to follow.

Understand COGS and the relationship to inventory (don’t write off expenses immediately)

  •  Impact: 8/10

  • Timeline to resolution: 1 Day of training with the Accountant

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 3

You know you are bleeding money every month. You would like to stop this and know that the cost of goods sold is important for your bottom line but you don’t understand when to really acknowledge this. When we checked in with Tiffany’s accountant we found that he had been writing inventory off as a business expense immediately after it was sold. This is a common mistake made by many accountants and business owners. Writing off expenses at an appropriate time prevents oversights and messy books when/ if that product ever gets returned.

Write SOPs

  • Impact: 6/10

  • Timeline to resolution: 2 weeks

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 5

So you started a business, it grew rapidly, you did not set up systems or processes and have begun to do that now. Like Tiffany, you might have handed several roles over to your team. In this process, you forgo writing down the standard operating procedures (SOPs for short) and now you just don’t have the time. In order for your team to sustainably carry out these new changes without reverting back to old habits, they must have documents that they can refer back to. Not only does this help with habitual success it also helps when someone on the team with a valuable role wants to take a vacation or gets sick. With an SOP you can easily have another team member fill that role in the interim.

Retain control of your company (Is Amazon good for my business?)

  • Impact: 9/10

  • Timeline to resolution: A month

  • Ecommerce Maturity Stage WITH: 6

  • Ecommerce Maturity Stage WITHOUT: 3

In order to reach that 20 Million goal, our last tip is to Scale. It. Back. By only offering your products and services on one or two selling platforms you are putting more control in your hands as well as ensuring quality and customer satisfaction. For Tiffany, she had not considered the impact of her customers’ experience to her stage of growth. We suggested she move her products off Amazon and really focus on two selling platforms. By taking herself off of Amazon she regained control of her business and control of her customers’ experience.

So What Now? 

We hope that these top ten mistakes helped you look at your own business from a new perspective. Here at Clearinity we acknowledge that this is a journey and not an overnight fix. Start at your highest-impact changes and begin there. As always we are here to help you along that journey and continue to push for your business to reach its highest potential. Reach out to us and stay tuned for more tips and tricks.