How to Calculate & Improve eCommerce Profit Margins

Posted on by Pavel

For your business to truly be successful in the world of eCommerce, you need to maximize profit margins. But, before you can work on maximizing profit margins, you’ll first need to learn how to calculate and improve them. 

Profit margins aren’t just a key indicator of a company’s financial health — they also help business owners make decisions related to the pricing and inventory management of the company.

When it comes to increasing profit margins for your eCommerce business, Kickfurther can help. From our business blogs such as this one or 5 Ways To Increase Profit Margins to our inventory funding platform that puts you in control, we are here to work with you – not against you! Plus, we know how hard you work to achieve healthy profit margins and for that we offer inventory funding up to 30% cheaper than other options. The more you learn about us, the sooner you’ll be headed over to start your Kickfurther success story. 

Keep reading to learn how you can improve your eCommerce profit margins with Kickfurther. 

How to Calculate eCommerce Profit Margins

To calculate your profit margin, you can subtract the amount of revenue generated from the cost of running a business. The difference is what your profit margin is.

The formula can be written out like this: 

Total revenues – the cost of goods sold = profit margin. 

While the formula for calculating a profit margin isn’t innately hard, many business owners can have trouble accurately tracking and figuring out what their exact cost of goods sold is. It can be easy to omit certain expenses or round up and estimate certain areas, which results in incorrect calculations and skews business plans. 

That’s why ensuring you’re correctly calculating your profit margin is crucial to staying informed and making the right business decisions based on accurate information. 

Top factors that influence eCommerce profit margins

Each business will have different considerations and expenses to manage when it comes to increasing their profit margin. Since several factors ultimately impact your bottom line, it can help to really understand what factors into an eCommerce profit margin. Here are some of the top factors that influence eCommerce profit margins. 

#1. Pricing strategy
Your pricing strategy is, of course, directly linked to the profit margin you generate. If you set prices too low, you could get higher sales but generate less overall profit. On the other hand, high prices impact the amount of sales you get. eCommerce business owners have to find the sweet spot to attract customers and drive sales, but ultimately generate a profit. 

#2. Cost of goods sold (COGS)
When you produce or purchase costs for your eCommerce company, the cost of Goods Sold (COGS) are a key factor in determining profit margins. If you’re looking to decrease your COGS, you can try to lower your production costs or find a more affordable supplier. This is where strategies around inventory management are crucial to finding efficiencies and improving your profit margin. When we talk about reducing costs we always like to remind business owners to avoid shortcuts that will have negative impacts. Typically cutting costs really comes down to just operating more efficiently. 

#3. Shipping and handling fees
Whether you pay for the shipping and handling fees or you make your customers pay, they ultimately impact your bottom line. Plus, you’ll need to factor fulfillment as well. Ensuring products arrive promptly and in good fashion is an important part of operating a successful eCommerce business. 

#4. Advertising and marketing costs
Spending money on advertising and marketing costs can help you grow your business and generate sales. But, inefficient spending or campaigns that fall flat can impact your profit margin. As can successful campaigns too. 

3 Tips for improving eCommerce profit margins

While profit margins can vary by industry, the average eCommerce profit margin should be between 50 and 70%. If you’re not calculating your profit margins as an eCommerce entrepreneur or aren’t falling within the recommended ranges, there are a few ways you can improve your profit margins so you can keep more money in your pocket and increase profit margins. 

#1. Reduce costs
The simplest and most obvious way to increase profits is by reducing your overall costs. Implementing cost-cutting measures like reducing overhead costs, finding more efficient shipping methods, and streamlining operations can immediately impact your profit margins. 

For example, you can try to negotiate better shipping rates or utilize more cost-effective shipping options. However, you don’t want any cost-saving efforts to impact your product’s quality or your customer’s experience.

#2. Negotiate with suppliers
While it might be daunting, re-negotiating your agreements with suppliers can really help increase profit margins. 

The best way to do this? Focus on building long-term relationships with your vendors. When you’ve shown your commitment to the business, on-time payments and regular communication, a vendor might be more likely to offer flexible payment terms or decrease pricing. 

Ordering in large quantities may help you earn a discount too. To access working capital in order to be able to financially afford to order more inventory and or pay faster, consider inventory financing. 

#3. Automate processes
Another way you can try to increase your profit margins is by automating specific processes to reduce costs. Implementing software to help with inventory management, order fulfillment, and customer service can help you save money and therefore increase profit margins. 

Want more tips? Read 5 Ways To Increase Your Business Profit Margins

Benefits of inventory financing for eCommerce businesses

If you’re looking for a way to increase your profit margins without making other sacrifices to your goods or service,  inventory financing for small businesses can help. With inventory being the largest expense for most eCommerce business owners, decreasing your inventory expenses can immediately help improve the amount you earn from each transaction. 

When entrepreneurs use Kickfurther, they can: 

  • Increase their cash flow: With less money tied up in inventory, business owners can maintain healthy cash flow and invest in other areas of growth.
  • Improve inventory management: Whether you’re preparing for a busy season and need to stock up on inventory or you’re worried about weathering a down period, inventory financing can help you improve your inventory management costs. Invest more in improving operations and less time worrying about what you can and can’t “afford.”
  • Spend on more strategic initiatives: With more working capital, you’ll be able to invest in strategic initiatives. The things you once overlooked can soon become a focus that can transform the way you do business.
  • Develop a payment structure that works: While we can’t speak for all means of inventory financing, we can speak for our own platform. At Kickfurther, business owners are in full control down to controlling repayment schedules. Because we know in business and in life, we have to make things work for us. It’s no surprise that our team of entrepreneurs is all for creative solutions to make things work.

Closing thoughts

Maximizing profit margins for your eCommerce business is crucial to the financial health and success of your company. Not only can it help improve your operations, but you’ll also be able to grow your company and use your capital the way you want — not just on inventory.

With Kickfurther, you can grow your business and have more fun while doing so. Our inventory now, pay later model ensures you can get the working capital you need to purchase inventory but only pay for what you sell. Our platform connects business owners to a community of backers that can fund up to 100% of inventory. No tricks, no gimmicks, just good business practices. Kickfurther’s value proposition:

  1. No immediate repayments. You control repayment. Don’t pay until your product sells.
  2. Non-dilutive. Maintain equity in your business, we know how hard you worked for it. We are here to work with you, not against you. 
  3. Not a debt. Because you have enough financial strain, this is not a loan. 
  4. Upfront capital. Pay suppliers faster with upfront capital, there when you need it. 

Take advantage of the opportunity to grow your business and watch profit margins thrive. Create a free business account at Kickfurther today!

Key Metrics Your Consumer Goods Company Should Measure

Posted on by Pavel

Key metrics for consumer goods sellers should provide an accurate overview and measurement of your company’s performance, productivity and  how effectively your business’s marketing efforts are working. Understanding how to use these metrics can help you set marketing strategy while managing your inventory and identifying where improvement is needed.

Best metrics your consumer goods company should measure

Your company should measure metrics because the results can measure performance and help to plan and set marketing strategies and goals. The most helpful metrics to measure are:

Customer Acquisition Cost (CAC)

Customer acquisition cost (CAC) is a metric used to track the total amount you spend when converting a lead into a paying customer. It evaluates  the cost of sales and your marketing spend. CAC tells you if your marketing efforts are working and if your investments in customer acquisitions are yielding results. It can be calculated by adding the cost of sales and marketing over a specific period of time and dividing this sum by the number of new customers during the same time period. The amount of money you spent getting a new customer is the result. Lower CACs mean you are using fewer resources to get new customers. Higher CACs mean your acquisition strategy isn’t working.

Sales Revenue and Growth

Sales revenue should include the total amount of money generated through product sales. Measuring sales revenue can provide insights on the effectiveness of your  pricing strategy and the demand for your products.

Customer Lifetime Value (CLV)

Customer Lifetime Value is the amount of revenue a customer is expected to spend over the course of a lifetime with a specific company. The relationship of a company’s LTV to CAC ratio serves as a gauge of the effectiveness of their marketing strategy. By using LTV, a company can focus on creating long-term customer relationships.

Inventory Turnover

Inventory turnover measures how quickly inventory is being sold and replaced. Higher turnover rates mean products are in high demand.

Optimize inventory management to avoid excess stock or stockouts, reducing holding costs and maximizing sales.

Align inventory with demand and increase your inventory accuracy while improving your forecasting capabilities.

  • Analyze demand: Use historical sales data, market trends and customer feedback to predict demand and identify patterns. Use this information to adjust your inventory level and order quantities accordingly.
  • Set reorder points: Determine the minimum quantity of each product needed to fulfill customer demand and set a reorder point to ensure you have enough stock on hand to meet demand without carrying excess inventory.
  • Automate inventory tracking: Use inventory management software to automate inventory tracking. Monitor sales and vendor lead times to help identify inventory levels, sales trends and to help identify potential stock outs before they happen.
  • Implement just-in-time inventory management: This is a system where inventory levels are kept to a minimum and replenished only when needed. It reduces holding costs ensuring you have the needed inventory ready to meet customer demand.
  • Implement effective forecasting and replenishment strategies: Use forecasting tools to predict inventory needs and ensure timely replenishment. This will help reduce stockouts and overstocking ensuring that you have enough inventory on hand to meet customer demand.

Return on Investment (ROI)

ROI measures the return on investment of specific marketing campaigns to allow your company to assess the effectiveness of marketing expenses.

Customer Satisfaction and Loyalty

Customer satisfaction is measured by how satisfied customers are with the company’s products and services. This also allows your company to make necessary improvements to increase customer loyalty and boost sales.

Distribution and Channel Performance

Distribution performance measures how effectively products are delivered from manufacturers to customers using various channels like retailers, wholesalers or ecommerce platforms. Channel performance is the ability of a company to successfully reach and engage with customers through various distribution channels like online platforms, physical stores or third-party resellers. It includes factors like marketing, advertising, customer service and brand reputation. Reaching and engaging with target customers is key to successful distribution and channel performance.

How Kickfurther can help

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.

Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.

Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.

Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

Closing thoughts

By tracking and analyzing consumer goods sales metrics and using Kickfurther inventory financing, you can achieve the financial flexibility to expand your inventory and free up capital to grow your business successfully. Let Kickfurther be your inventory funding partner.

Guide to SBA Loans

Posted on by Pavel

Securing funding for your business in order to fuel growth can be challenging. Insufficient funding may hinder your ability to implement growth strategies such as increasing your range of products, expanding marketing campaigns, or hiring qualified staff. 

Some options to alleviate your cash flow pinch are to apply for an SBA loan or inventory financing. Combining inventory financing and inventory factoring can be a wise strategy to increase your working capital.

Kickfurther is the world’s first online inventory financing platform that empowers small businesses to access funds that may be inaccessible from traditional sources. We connect brands to a community of eager buyers who help fund inventory while giving brands the flexibility to pay it back as they receive cash from their sales. This eases the strain on cash flow so brands can scale quickly without limiting financial flexibility or inventory. 

What is an SBA loan?

An SBA loan is a loan for a small business that is backed by the U.S. Small Business Administration (SBA). SBA loans are designed to help small businesses gain access to financing that they might not otherwise be able to get from traditional lenders. The SBA provides a guarantee to the lender that it will cover a portion of the loan if the borrower defaults. This guarantee encourages lenders to make loans to small businesses that might be considered too risky otherwise. SBA loans may have more flexible payment terms and can be used for a variety of purposes, including working capital, equipment purchases, real estate acquisitions, and other business expenses. Terms and conditions of SBA loans can vary depending on the specific program and the lender, but they typically have longer repayment terms and lower interest rates than traditional bank loans.

How SBA loans work

The SBA guarantees business loans from lenders.  This encourages banks to finance businesses that might not be approved for a loan in other circumstances. The process to obtain an SBA loan may take longer than the process for inventory financing.

Types of SBA loans

  1. 7(a) Loan Program: This is the SBA’s flagship loan program and is the most popular program offered by the SBA. It offers flexible financing for a variety of business purposes, including working capital, equipment purchases, real estate, and debt refinancing. This program allows a maximum loan amount of up to $5 million.
  2. CDC/504 Loan Program: This loan program provides long-term, fixed-rate financing for small businesses for the purchase of fixed assets ,like land, buildings, and equipment. The maximum loan amount allowed under this program is $5.5 million. In most cases, owners need to guarantee at least 20% of the loan. These loans are made through the SBA’ s community-based partners called Certified Development Companies (CDCs). The funds cannot be used to buy inventory, consolidate debt or as working capital. 
  3. Microloan Program: Small businesses can receive loans of up to $50,000 through the Microloan program, which aims to assist them with startups and expansion. This loan program provides capital for minorities, veterans, women and low-income entrepreneurs. It provides access to capital for underserved communities through not-for-profit lenders. The program boosts funding for small businesses and non-profit organizations that have insufficient collateral and a limited credit history.
  4. Disaster Loan Program: This loan program provides long-term, low-interest loans to small businesses that have suffered physical or economic damage due to a declared disaster. After a disaster, the SBA determines whether businesses qualify for compensation under the Disaster loan program.

How to Qualify for an SBA loan

Lenders and loan programs have special eligibility requirements for SBA loans. The eligibility for each loan is based on the business location, the character of each borrower and what each business does to earn its income. Businesses need to have a sound business purpose, meet SBA size requirements and be able to repay. You will be matched  with an SBA-approved lender to find the best loan to start or grow your business. Even borrowers with bad credit may qualify for startup funding. Your lender can provide you with a full list of eligibility requirements to get your SBA loan.

How to Apply for an SBA loan

To apply, go to the SBA website or go to your local SBA office to fill out their loan application. To get an SBA loan, you will need to provide documents and information to verify your identity, personal and business history, creditworthiness, and legal documents to verify your business. This process can take up to several weeks.

Benefits of SBA loans

The benefits of  SBA-guaranteed loans include:

  • Competitive terms:  Guaranteed loans have rates and fees comparable to nono-guaranteed loans. 
  • Counseling and education: SBA loans offer continued support to help you start and run your business.
  • Other benefits: These include lower down payments, flexible overheard and no collateral needed for some loans. 

Tips to qualify for an SBA loan

  • Provide accurate financial statements: Gather and provide accurate financial statements to show your business’s financial stability. 
  • Consider your collateral: The SBA requires collateral for some loans such as real estate, equipment or inventory which may increase your chances of loan approval.
  • Build your credit score: A high credit score is an important factor in securing an SBA loan. 
  • Approach an SBA lender: Choose an SBA approved lender who offers a loan program that fits your business needs. Be ready to answer any questions..

SBA Loans vs. Inventory Financing

SBA loans are obtained from a lender and are backed by the U.S. Small Business Administration, which guarantees a portion of the loan. SBA loans offer lower interest rates than traditional bank loans and require more documentation to apply. The application process may be lengthy.

Inventory financing is a term loan where the lender provides a business owner with capital to purchase products so you can manage your inventory. The inventory is the  collateral to secure your financing and the revenue generated from these products repays your loan. These loans usually have shorter repayment terms and higher interest rates than SBA loans. This type of funding usually requires a track record of sales.

An advantage of inventory financing is that you can promptly and effortlessly respond to shifts in the market and your funds are quickly accessible. When considering whether to offer you funding, lenders usually only consider your invoice and account receivable values.

Your business will be better positioned for increased growth with inventory financing. The loan allows you to meet customer demand, upgrade products and can be helpful for seasonal businesses. Your cash flow stays unaffected by your inventory purchasing. Since your inventory secures the loan, your personal risk is lower. However, inventory financing usually has higher loan rates than SBA loans. If your credit score isn’t high enough, or your business is fairly new, you might not qualify for inventory financing. 

Inventory financing lines of credit, which are different from inventory financing loans, operate in the same way that a credit card does. They give borrowers funding they can draw from for their business needs. The business’s inventory secures the credit line. Inventory lines of credit are revolving and the line is replenished as you repay what you borrowed. You can only use the line of credit for inventory. 

How to qualify for Inventory Financing

These loans are relatively simple to apply for online, faster and you may not need as much personal credit or collateral to finance the loan. Most lenders will want a credit check, a business plan, financial statements to verify your sales and revenue, a list of inventory you plan to buy with pricing, and plans for storage of the inventory. 

Why combining invoice factoring with inventory financing is a good plan for your small business

Invoice factoring involves selling your accounts receivable at a discount. When you use invoice factoring, only your invoices and accounts receivable values are considered when a decision is made to offer you funding. Factoring allows you to choose the invoices to be included. 

Both inventory financing and invoice factoring are tools designed to improve your cash flow. Factoring has the ability to make the most significant and cost-effective impact, so it should be implemented first. Combining both Invoice factoring and inventory financing is the best way to  boost your working capital while supporting your business growth. 

Closing thoughts

Kickfurther provides small business inventory financing to help your small business respond quickly to market changes. You can receive up to 100% of the funds you need with flexible payment terms while you retain control. Without adding debt or giving up equity,  you can grow your business. Kickfurther doesn’t take equity in exchange for funding.

With Kickfurther, you don’t have to make payments until your fresh inventory order starts generating sales. You have the flexibility to structure your repayment plans according to your cash flow needs. With Kickfurther, you get quick access when you need capital so you can rapidly increase your inventory. By funding your inventory expenses,  you can free up capital to grow your business in other ways. 

Whether you are considering an SBA loan or inventory financing, it’s best to do your research to evaluate which financial product offers the best loan rates and terms. You want the best product that helps you achieve your business goals. 

Best Small Business Loan Options For Purchasing Inventory

Posted on by Pavel

Inventory is a critical part of consumer packaged goods (CPG) brands. From properly managing it to delivering it and stocking just the right amount, you’ll want to perfect your inventory system early on. As sales grow, it can be challenging to navigate how to buy more inventory without inflicting low or negative cash flows. At some point you may need to entertain the idea of inventory financing for small businesses, or maybe you already have but got discouraged. 

Small businesses often think of inventory financing as the perfect solution until they learn more about it. With strict requirements and repayment periods and high costs, it can be more harmful than helpful, even though that’s not how it should be. 

Our founder, and entrepreneur, once encountered the challenge of inventory financing that actually worked to grow 

What are the different small business loan options available for purchasing inventory?

Educate yourself on the various options available for purchasing inventory. Options can include the following:

  • Business term loans: Funded as a lump sum, general business loans can be used for purchasing inventory. 
  • Business line of credit: A revolving line of credit can supply the funds you need on an ongoing basis to purchase inventory. 
  • SBA loans: Government backed SBA loans are intended to help businesses cover expenses and help them grow.
  • Inventory financing: Designed for funding inventory, inventory financing is a top choice for businesses in need of funds to purchase inventory. 

How can small businesses determine the right amount of funding they need to purchase inventory?

Guessing is not an effective solution for managing inventory. To determine how much inventory to purchase you’ll need to closely track sales,  seasonal demand, and any activities that impact sales to understand how much inventory to stock and when to stock it. For example, the holiday season may cause sales to spike. Therefore, you’ll want to order more to be prepared for the season. Educating yourself about inventory management can help you get a pulse on how much inventory you need. 

Once you understand how much inventory you need, you can work on determining what it will cost you. When you’re ready to gather funding, visit Kickfurther to get started. 

Are there government-backed loan programs that offer favorable terms for small businesses acquiring inventory?

Under the SBA (Small Business Administration) loan program you’ll find the SBA inventory financing option. SBA loans are partially backed by the government and issued by SBA-approved lenders. Designed to provide favorable terms and funding for small businesses, you may want to consider this option. The pain points here though are usually the strict requirements and lengthy funding times. For businesses they need regular access to funding for inventory this may not be an ideal solution. 

How does inventory financing work, and what are its advantages for small businesses?

Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary. 

At Kickfurther, our model works as follows:

  1. Create an online profile 
  2. Launch your deal to attract buyers 
  3. Get funding within minutes to hours 
  4. Set your ideal repayment schedule 
  5. Sell inventory and repeat the process when you’re ready again! 

After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round. 

What documents and information should small businesses prepare when applying for inventory loans?

Similar to other loans, inventory loans usually require plenty of documentation. Before applying, make sure you can prove why you need the amount of inventory funding you’re requesting. Documentation that may be required can include the following. 

  • Bank statements
  • Business plan
  • Balance sheet
  • Sales history
  • Legal documents and licensing 
  • Budget
  • Tax returns 

Be able to prove to the source of funding that you can benefit from the funds and that you can live up to the promise of repayment. 

How long does it typically take to secure a small business loan for purchasing inventory?

Getting a business loan, for inventory or anything else, can require a lot of time, patience, and energy. With traditional methods getting inventory financing can take anywhere from a few business days to a few weeks (or even months for SBA loans). When funding runs out and you need more, the cycle starts again. If you use Kickfurther for inventory funding, getting more funding when you need it is streamlined. As a business owner your business and growth actions deserve all of your attention. We recognize how hard you work and hope to make inventory funding one less thing to worry about. 

Are there any alternative financing options or creative strategies to consider for inventory purchases?

As a business owner, creative strategies are probably your go to, we know they are at Kickfurther. Our platform is an idealistic example of a creative way that’s legitimate and safe to access the funds you need for inventory. Investors and alternative types of funding often prey on desperate business owners, which is wrong. Because we all deserve the opportunity to succeed, we’ve created a platform that levels the playing field. 

How does inventory financing work, and what are its advantages for small businesses?

Generally, inventory financing is secured by the inventory purchased with the funds. Funding may go directly to the business or it can go toward the supplier. Depending on the lender or source of the funding, repayment terms can vary. 

At Kickfurther, our model works as follows:

  • Create an online profile 
  • Launch your deal to attract buyers 
  • Get funding within minutes to hours 
  • Set your ideal repayment schedule 
  • Sell inventory and repeat the process when you’re ready again! 

After a successful round of funding with our community, it’s likely you’ll be able to get lower rates the second round. 

How Kickfurther can help

Kickfurther funds up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

Why Kickfurther?

  • No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
  • Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
  • Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory.

Kickfurther puts you in control of your business while delivering the costliest asset for most CPG brands. And by funding your largest expense (inventory), you can free up existing capital to grow your business wherever you need it – product development, advertising, adding headcount, etc.

Closing thoughts

What’s best for your business is something you’ll need to decide. What we know though is that there’s no shortage in demand for affordable inventory funding in the CPG world. 

Kickfurther can help small businesses obtain inventory funding for up to 30% cheaper than comparable options. Because growth mode is the only mode we know, we’ve created a platform for CPG brands to obtain the funding they need, in the manner they’ve always dreamed of. At Kickfurther you can get inventory now and pay later, all while having fun doing so. Our platform connects business owners to a community of backers that can fund up to 100% of inventory. 

How to Optimize Cash Flow for Your eCommerce Business

Posted on by Pavel

Businesses in the e-commerce space face high pressures for healthy cash flows, as businesses do in other industries. With money flowing in slower than it may be flowing out, combined with high costs of inventory, e-commerce businesses can face challenges. As an e-commerce seller you maintaining healthy inventory levels is critical. One way to alleviate cash flow challenges for e-commerce sellers  is to leverage e-commerce inventory financing. 

At Kickfurther, we provide e-commerce sellers an affordable and flexible solution for inventory funding. Here’s what you should know about optimizing cash flow for your e-commerce business. 

Importance of cash flow optimization for e-commerce businesses

Cash flow is the movement of money in and out of a business. 

Healthy cash flow is critical for eCommerce businesses. Businesses need cash on hand to cover expenses such as inventory. In the eCommerce space, there can be delays in incoming cash flow. Furthermore, cash can be tied up in inventory, which is the lifeblood for your business. As an e-commerce seller you face high competition and therefore, should always have enough inventory on hand to never miss sales. 

Keeping a pulse on cash flow and planning ahead can help you optimize cash flow. In some cases, you may need to put solutions in place to optimize cash flow. Afterall, a negative bank account won’t get you far in business. Cash flow can be difficult and stressful to manage, but step up and dig in. Failure to manage cash flow can be detrimental to e-commerce sellers. 

Common factors that can impact cash flow in an eCommerce business

  • Inventory costs: Inventory can tie up cash flow, but it’s not something you can avoid as an e-commerce seller. However, there are some e-commerce selling models that allow you to eliminate inventory costs. E-commerce sellers often use inventory financing as a way to finance inventory to free up cash flow. 
  • Shipping costs: As an e-commerce seller, shipping is an important business function. However, it can also contribute to cash flow dilemmas. When a  buyer orders a product, there is a delay between the purchase and the shipment and the delivery of the product. All of this can contribute to delays in cash flow. While you may not receive funds until after a product is delivered, you’ll still need to cover the costs associated with the sale. When shipping mass amounts, shipping costs can add up quickly. 
  • Storage costs: Storing inventory can tie up a significant amount of cash flow. As an e-commerce seller it’s important to have adequate inventory management techniques so that you don’t overstock or understock inventory. 
  • Shipping times: The quicker you can get products to customers, the quicker you can get paid in most cases. This is a simple way to improve cash flow. Remember that fulfillment involves more than just shipping times. The faster you can find, package, and ship the product, the faster it can be delivered. 

Tips on how to reduce  costs to optimize your cash flow

  • Negotiating better deals with suppliers: Ensuring you keep costs as low as possible, without taking costly shortcuts can contribute to the bottom line. While this may not immediately help improve cash flow, it can have an impact. Suppliers may be willing to offer discounts on regular or bulk orders. You want to be reasonable with your supplier, but you should ask them from time to time if there are any ways you can negotiate a discount.
  • Using more efficient shipping methods: Shipping is a big expense. From packaging to actual shipping costs, e-commerce sellers should evaluate shipping costs and methods on a regular basis. By doing so, you can grow the bottom line and optimize cash flow. 

Importance of understanding your cash flow and creating a budget

Cash flow is not a black and white topic, and expenses can fluctuate. It’s a topic that should be evaluated on a regular basis. While budgets are important, monitoring cash flow on a regular basis is more important. When it comes to setting budgets, you should understand where money goes and how much activities cost. When you evaluate business finances and try to identify ways to improve cash flow, you’ll want to pay attention to the bottom line to ensure you are in the green, despite any cash flow delays. 

Tips on how to forecast your cash flow and track your expenses

Forecasting cash flow is a skill that business owners should master. Here are some tips that can help track expenses in order to improve cash flow. 

  • #1. Invest in technology: Technology can help you track expenses and manage cash flow. Invest in systems that can help you automate expense tracking and learn how to use these systems. 
  • #2. Leave room for error: When it comes to forecasting cash flow, expect for some things to go wrong. Leaving room for error can be a useful tactic to maintain healthy cash flow. Plus, it can allow for expenses to fluctuate without causing cash flow to go red. 

How inventory financing can help to improve cash flow

Inventory financing is a valuable way to improve cash flow. Rather than using cash reserves to fund inventory, use financing instead. While financing comes with costs, freeing up cash flow can create the opportunity to invest and 

grow business. One of the challenges of inventory financing is often the costs associated as well as the requirements to qualify. At Kickfurther we strive to offer small businesses a funding solution for inventory that is affordable and flexible. 

One of the biggest perks of inventory funding with Kickfurther is the ability to purchase inventory without having to pay upfront. Take advantage of the freedom to repay as inventory sells, so that you can maintain the healthiest cash flow possible. 

How Kickfurther can help

E-commerce sellers may struggle to find affordable inventory funding that works. We understand the feeling of hopelessness as our founder was once in your seat. With the mission of helping small businesses obtain affordable inventory funding without the headache, we created Kickfurther. At kickfurther you can fund up to 100% of your inventory costs on flexible payment terms that you customize and control. With Kickfurther, you can fund your entire order(s) each time you need more inventory and put your existing capital to work growing your business without adding debt or giving up equity.

  • No immediate repayments: You don’t pay back until your new inventory order begins selling. You set your repayment schedule based on what works best for your cash flow.
  • Non-dilutive: Kickfurther doesn’t take equity in exchange for funding.
  • Not a debt: Kickfurther is not a loan, so it does not put debt on your books. Debt financing options can sometimes further constrain your working capital and access to capital, or even lower your business’s valuation if you are looking at venture capital or a sale.
  • Quick access: You need capital when your supplier payments are due. Kickfurther can fund your entire order(s) each time you need more inventory..

Strategies to Help Your Business Combat Inflation

Posted on by Pavel

Inflation can increase the cost of goods sold which can negatively impact businesses. Even with the power to increase the cost of your goods or services, inflation can impact your business.. As costs increase, your bottom line can take a hit and your cash flow can be interrupted. Additionally, borrowing money can become more expensive as interest rates can rise with inflation. 

By taking a proactive approach though, there are ways your business can combat inflation. Keep reading to learn more. 

What is inflation?

Prices rise on a regular basis, which is known as inflation. Inflation is typically expressed as a percent at which goods and services increase in cost over time. Some may view inflation as a positive while others may view it as a negative. What we can say about inflation is it’s unavoidable for business owners. As a business owner, you should always prepare for prices to fluctuate to some degree, up or down. When it comes to combating inflation in terms of interest rates and borrowing money, the cost of borrowing is an ongoing challenge. For CPG (consumer packaged goods) brands keeping up with demand can impact cash flow. With inflation, the challenge may be even more difficult. At Kickfurther we help CPG brands access affordable inventory funding to combat inflation. 

How does inflation impact businesses?

Inflation impacts personal and business finances. When every aspect of doing business increases, changes will need to be made to adapt. Beyond that though, inflation increases the cost of living for consumers which can also impact businesses. 

The point – inflation impacts more than just the bottom line for businesses. It affects every aspect of a business. 

The good news is that with a little bit of creativity and a desire to maintain a successful business, you can combat inflation. 

What are some specific things businesses can do to combat inflation?

As a business owner, creating a plan, and revising it frequently, can help you combat inflation. Nothing is ever perfect, but ignoring reality is not a solution. Operating a business takes a lot of work as does making educated decisions. Combating inflation means protecting your bottom line, which is critical to success. Here are some ways business owners can work to combat inflation. 

  • Strengthen your supply chain: As we mentioned, inflation will impact all areas of every business. As you work to combat inflation, you’ll need to prioritize keeping enough inventory in stock so that sales don’t unnecessarily suffer. You may also need to change how much inventory you stock as sales can shift. Whether you manufacture products on your own or outsource, strengthening your supply chain will be critical as you navigate inflation. Work with suppliers to find solutions that benefit the both of you. Take their pulse on their financial health. Afterall, you rely on them for inventory. While inflation can be devastating for businesses operating the right way it should not lead to failure. If you are manufacturing products, find ways to improve efficiency and keep costs down. As you try to protect your bottom line, you’ll need to analyze all activities contributing to it, many of which will be in the supply chain. 
  • Be strategic in your pricing: Pricing products right is key at all times, but especially when prices are rising. Invest time into surveying and analyzing as much data as you can to determine what the market can bear. You will likely need to raise prices but you won’t want to raise them so much that you lose sales. Find the happy medium that allows your business to thrive while keeping customers happy and coming back. For products that are purchased on a regular basis, some customers may not notice a small price increase, but a little extra from every sale can add up. The good thing about pricing is you can always change it in the event you make a mistake. 
  • Streamline your offerings: Efficiency is key when it comes to keeping costs down and beefing up the bottom line. Simplifying your portfolio is a great way to lower costs. If you offer three similar products, ask yourself if there’s a way to combine them into one while still meeting all needs of the customer. Streamlining offers can improve the bottom line in many ways from simpler fulfillment to bulk order discounts. When inflation occurs, making adjustments to keep a closer eye on costs will be critical. By streamlining, you can do just that.
  • Stockpile inventory to ensure stability: As prices rise, the cost of your inventory may rise too. While we usually always encourage business owners to only stock as much inventory as they need, this could be an exception. Stockpiling inventory can help you acquire it at a lower cost. It can help you ride the inflation wave until you have a more defined plan. However, it can also tie up working capital. 
  • Negotiate with suppliers: You are not the only one suffering from inflation. While negotiating is always important, you want to ensure suppliers have healthy operations as you need the partnership. Be honest when negotiating, especially during trying times. Find ways you can both benefit.  

What are the risks of not combating inflation?

Ultimately, if business financials are not healthy, the end will come sooner than later. While we are talking about inflation here, it’s always important to keep costs as low as possible, without taking any shortcuts. It’s also important to price products competitively so you capture as many sales as possible. If you choose to ignore inflation and wait for it to pass, that could be a huge, costly mistake. While you may make some temporary adjustments to see how things sort out, you should always be planning long term as a business owner. Playing devil’s advocate is a good thing, but we strongly urge business owners to not ignore inflation.

How Kickfurther can help

Kickfurther connects CPG brands to our community of backers that can provide working capital. At Kickfurther you can get inventory now and pay later, so you can combat inflation while improving the bottom line. Our unique funding model highlights the following. . .

  1. No immediate repayments. You control repayment. Don’t pay until your product sells.
  2. Non-dilutive. Maintain equity in your business, we know how hard you worked for it. We are here to work with you, not against you. 
  3. Not a debt. Because you have enough financial strain, this is not a loan. 
  4. Upfront capital. Pay suppliers faster with upfront capital, there when you need it! 

Closing thoughts

In our current economic state, inflation is a real challenge for business owners. Finding ways to combat inflation while preserving quality and value for customers can be accomplished. Through educated business decisions and careful planning, you can combat inflation. For affordable working capital solutions, lean on our platform. We’re here to help – and we mean it.