5 reasons why giving equity away to fund your inventory creates inefficiencies

Posted on by Kaylyn Perry

When you are starting and growing a business, it is important to make sure that you are as efficient as possible.

If you’ve ever given equity of your business away to fund goods or services, you’re not alone. A lot of companies do this in order to fund their inventory. However, there are some big drawbacks to this strategy that you should be aware of. 

In this post, we’ll discuss why equity-based funding can lead to inefficiencies and how you can avoid them. We’ll also tell you what you can do instead to help your business remain profitable.

Keep reading to learn more!

Top Reasons Why Giving Equity Away to Fund Inventory and Marketing is Inefficient

As a startup, it can be tempting to give away equity in order to raise money for inventory and marketing expenses. However, there are several reasons why this is not always the most efficient use of resources.

Leads to Conflict and Future Problems

First of all, giving away equity dilutes the ownership of the company among the founders and early investors. This can make it difficult to make decisions about the direction of the company and can lead to conflict down the road. Additionally, if the company is successful, the founders and early investors will have less of a return on their investment than if they had simply funded these expenses themselves.

Giving away equity also means that the company will have less control over its own destiny. The investors who hold equity in the company will have a say in how it is run, which can be counterproductive if their goals do not align with those of the founders. Giving away equity often means that the company will be valued at a lower price when it comes time to sell or go public, as investors will factor in the amount of equity that has been given away.

Equity Should Be Reserved for Key Moments in a Company’s Life

Equity should be reserved for key moments in a company’s life, such as attracting top talent or raising capital. Giving away equity to fund inventory or marketing expenses can dilute the ownership of the company and reduce the potential return on investment for early shareholders. 

A company’s equity is like its lifeblood – it’s what allows the company to grow and thrive. As such, there are a few key moments in a company’s life when you should reserve equity. The first is when you’re founded. This is the time when you have the most potential and the most to gain from investors. 

The second is when you’re growing rapidly. This is when your equity will be most valuable to investors, as they’ll be able to share in your success. 

Finally, when you’re profitable and stable, you should continue to reserve equity to attract and retain top talent. By reserving equity at these key moments, you’ll ensure that your company has the resources it needs to succeed.

While there are definitely times when giving away equity makes sense, companies should be mindful of when equity is truly needed and not use it as a Band-Aid solution to temporary cash flow problems.

It Can Devalue the Company and Make it More Difficult to Raise Money Later

Giving away equity in your company can have a number of other downsides. For one, it can devalue the company and make it more difficult to raise money later on. This is because investors will see that the company is not worth as much as it once was, and they will be less likely to invest. 

Additionally, giving away equity can make it more difficult to keep control of the company. If too much equity is given away, the founders may no longer have a majority stake in the business. This can lead to conflict and potentially even legal problems down the road. Therefore, it is important to think carefully before giving away any equity in your company. 

If you do decide to go ahead with it, make sure that you are doing so for the right reasons and that you are not putting the future of the business at risk.

It’s Tough to Track How much Has Been Given Away and to Whom

Giving away equity to fund marketing and inventory can be a tough decision for any startup. On one hand, it can be a great way to raise capital and get your business off the ground. On the other hand, it can be difficult to track how much equity has been given away and to whom. This can make it difficult to assess the true value of your company and make informed decisions about its future. If you’re considering giving away equity, be sure to weigh all the pros and cons carefully before making a decision.

It Can Be Seen as a Sign of Desperation or Weakness

Giving away equity in your company can be seen as a sign of desperation or weakness, so it’s important to think carefully before taking this step. One common reason for giving away equity is to raise money to fund inventory or marketing. However, this can be a risky move, as it dilutes the ownership of your company and reduces the amount of control you have over its future. 

If you do decide to give away equity, make sure you are doing so in exchange for something of real value that will help your business grow. Otherwise, you may find yourself regretting the decision down the road.

How Kickfurther can help grow your business

If you’re a business owner, you know that one of the most important things is keeping your inventory stocked. After all, you can’t sell what you don’t have! But sometimes it’s difficult to come up with the funds to purchase new inventory, especially if you’re a small business or just starting out. 

That’s where Kickfurther comes in. Kickfurther is a company that provides inventory funding for businesses of all sizes. They’ve funded millions of dollars in inventory for businesses all over the world, and they can provide funding quickly and easily.

Best of all, there’s no need to give up equity in your company. It’s a simple and convenient way to get the funding you need to keep your business growing. So if you’re looking for a way to grow your business without giving up equity, be sure to check out Kickfurther.

Wrapping up  

By giving away equity, you are also diluting your ownership and control. You’re essentially making it harder for yourself to succeed in the long run. So before you go out and give away equity to fund your inventory, take a step back and consider if there might be a better way. Let us help you find that better way—contact Kickfurther today to see what this company can do for you instead.

Best Inventory Demand Forecasting Techniques

Posted on by Kaylyn Perry

What is inventory demand forecasting?

Inventory demand forecasting is typically a responsibility of a supply chain manager or someone who reports to them. Demand planning or demand forecasting is a research-based job function that is used to accurately predict the needed inventory levels for specific products over specific periods of time in the future.

The more accurate a business can be when it comes to calculating what products they will have and when they will have them combined with determining what products will be needed and when they will be needed, the more efficient the business can be. 

Efficient and accurate inventory demand forecasting can ensure that a business always has enough stock to fill customer orders without tying up too much capital in inventory. 

When it comes to inventory demand forecasting, there are a number of metrics that a supply management team needs to keep track of. Here is a quick breakdown of some of those most vital metrics used in inventory demand forecasting.

  • Sales velocity versus average sales: The rate of sales without counting the days that a product was out of stock. To calculate sales velocity, you need to take 365 days and divide it by the number of days an item was in stock and then multiply that by 30 days. 
  • Lead time: The time it takes for a business to receive a product after ordering it from a supplier.
  • Economic order quantity: The most cost-efficient quantity of a product that a business can order.
  • Reorder point: The reorder point is a metric that takes into account the number of units sold per day, the lead time, and the safety stock level. This metric helps a business decide when to make a new order from a supplier.
  • Inventory turnover: The number of occurrences where a business has sold and replenished a product.
  • Average inventory: The average number of a product you have during a given period. 
  • Safety stock: The amount of a product you need in stock in order to account for minor surges in customer demand. 

With these metrics, a supply chain manager and their team can ideally calculate the most accurate and efficient inventory demand forecast.

Types of inventory forecasting

There are four commonly used types of inventory forecasting used by companies. The four types include trend, graphical, qualitative, and quantitative forecasting. Here are each of these types of inventory forecasting in a bit more detail.

  • Trend forecasting: Trend forecasting is a data set that tracks changes in demand for a product over time. An analyst looking at this data may be able to identify possible patterns using past sales and realized growth. They can also look at specific customers or groups of customers and predict how they may purchase in the future. Based on all of this information, new marketing techniques and special offers can be created. 
  • Graphical forecasting: The same data that is collected for trend forecasting can be conveyed using graphs to show fluctuations in sales over time. 
  • Qualitative forecasting: Qualitative forecasting uses data from customers that is collected through market research and focus groups to forecast potential demand. 
  • Quantitative forecasting: Quantitative forecasting uses past data to create time-series forecastings. The more data that is available, the more accurate the forecast can be.  

How inventory demand forecasting may help your business

Accurate inventory demand forecasting is essential for any business. The more accurate and efficient the forecasting, the more benefits a business can enjoy. Here are some of the most ideal benefits a company can expect if it can accurately forecast future demand.

  1. Maintain accurate stock levels: Accurate stock levels are important both ways. If you are always out of stock or short on a particular product, back-ordering customer orders or needing to cancel orders can give your company a bad reputation and cost you money. Missed sales due to insufficient stock are something you want to avoid at all costs. On the other hand, having too much stock is a problem as well. If you have too much product in inventory, that is money sitting idle that could be put to other uses as working capital. Additionally, warehouse space is not cheap. Paying to store a product that sits for long periods of time is not a wise use of capital.
  2. Save time: If you have accurate inventory demand forecasting, many processes such as reordering and updating can be automated rather than entered in manually. These types of automated processes are an excellent way to save time and resources.
  3. Maintain a healthy cash flow: To piggyback off of how accurate inventory demand forecasting can be beneficial, having accurate inventory demand forecasting can help a business maintain a healthy cash flow. Inventory is just the physical embodiment of money. Keep a constant flow of goods receiving and shipping to have a good amount of working capital on hand at all times. 
  4. Quicker reaction time to changes: Sudden changes in the supply chain can more easily be taken in stride if the inventory demand forecasting is accurate and all of the necessary metrics are well-maintained. 

Best inventory demand forecasting techniques

Supply chain management teams have various techniques they like to use to create the most accurate inventory demand forecasts that they can. Here are a few of the best techniques that are used today.

Identify trends

Trends can be summarized as peaks and valleys of demand that a businesses experience for a specific product through the product cycle. It’s important to be on top of those trends for accurate forecasting. 

Adjust forecasting for seasonality

Seasonal demand exists for every type of product, however, it should be kept separate from base demand. Seasonal demand takes into account the holiday shopping season, weather patterns, and other factors that may create a surge in demand for a specific product. It is important to be aware of seasonality for each different product in inventory.

Use inventory demand types

Different products tend to have different demand types. Make sure you are aware of those demand types. Some products are always in demand but the level of demand varies greatly, some are always in demand but at consistent levels, and some have clearly defined peak demand times and times when there is little to no demand. 

Decide on future forecast period

The forecast period for a specific product depends on the volatility of demand. If demand for a certain product seems to be sporadic, then forecasting will need to be done on a more frequent basis. If demand for a product is slow yet consistent, then forecasting periods can be done for much longer periods into the future. 

Consider qualitative inputs

Qualitative inputs include sales promotions, competitor activity, and future events that could affect future demand. These factors need to be considered as well, however, they can be treated similarly to seasonal demand where it is calculated separately from base demand. 

Using a demand forecasting software

Demand forecasting software can be especially useful if your business is complex with multiple lines of products all with varying degrees of demand. There are enterprise resource planning systems, warehouse management systems, e-Commerce tools, and inventory optimization software that all can help a business create accurate forecasts. 

How Kickfurther can help

Accurately forecasting inventory can uncover over and under stocking issues. As you work to perfect inventory forecasting you may discover a need to stock more inventory. While finances should not stand in the way of stocking plenty of inventory, the reality is they do. Luckily, Kickfurther can help by connecting you to affordable inventory funding. 

Kickfurther is the world’s first online inventory funding platform that enables small businesses to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. 

Kickfurther can help startups and small businesses fund millions of dollars of inventory at costs up to 30% lower cost than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

7 Inventory Control Problems and How to Solve Them

Posted on by Kaylyn Perry

Inventory control can affect sales, budgets, customer satisfaction, and so much more. From being able to access inventory quickly to always having enough items in stock, inventory control is a complex topic. While you may have to make some mistakes on your own, you should try to avoid mistakes where you can. 

What is inventory control?

Inventory control refers to all aspects of managing your company’s stock levels and getting these products to customers as expected. The most important aspect of inventory control is ensuring accurate and sufficient stock levels in order to keep up with consumer demand. This process may be done in-house or through a third-party company such as a logistics provider or order fulfillment warehouse. The use of fully automated inventory control systems allows retail companies to successfully manage their inventory without costly mistakes or issues.

Why inventory control is important in business

Inventory control is one of the most important aspects of any products-based business. Failure to properly manage your inventory and successfully fulfill orders can lead to all sorts of costly issues and cut into your potential profits. Understanding how to manage your inventory and avoid inventory control problems is the key to your future business success and profitability.

Most Common Inventory Control Problems

While there are many things that can go wrong when it comes to inventory control, the most common problems that small businesses encounter are as follows.

  • Understocking or overstocking: Understock and overstocking can both be costly mistakes. In some cases they are a result of negligence, while in other cases they may be a result of poor inventory control or cash flow restraints. Understocking most commonly results from cash flow challenges or supplier problems. Both of these issues can easily be fixed, but before you dive in make sure you are managing inventory properly and know exactly what you need. On the other hand, overstocking occurs when too much inventory is purchased. If you don’t have adequate inventory tracking systems in place it’s easy to overstock inventory on accident. The sooner you acknowledge that you’re overstocked, the better. Make efforts to liquidate some inventory or devise a plan for moving it. Overstocking and understocking can affect your bottom line through lost profits, tied-up cash flow, and missed sales. Utilizing a robust inventory management system in conjunction with analytics can help prevent these costly issues.
  • Supply chain difficulties: Retail businesses are often at the mercy of their suppliers. Issues with your supply chain can lead to shipping delays, product shortages, the inability to fulfill orders, and other challenges to keeping up with consumer demand. These issues also affect customer satisfaction and can hurt your company’s reputation. It may sound scary to jump ship, but trying a new supplier may be necessary. Before switching, be sure to vet the new supplier. Asking to speak with current customers can be a great way to gather real insight.
  • Inaccurate stock: You can’t sell a product that isn’t actually on your shelf. A lack of automation and lack of communication between your warehouse and your website can lead to mistakes in your inventory count and inaccurate stock levels. While it may require investment, having accurate real-time data helps you spot problems and keep customers happy.
  • Demand complexity: There are many factors involved in proper inventory control. Businesses must remember to account for these factors including demand volatility, seasonal fluctuations, product life cycles, and supply chain complexities. These challenges can make it difficult to plan for and maintain the right amount of inventory.
  • Lack of communication: If different departments of your business are not properly communicating with each other, you will be much more likely to encounter inventory control issues. For example, whoever is in charge of purchase decisions should be kept informed of every aspect of inventory management from the current state of the warehouse to any anticipated changes in market conditions or seasonal demand. The right technology can increase this visibility and cooperation between everyone involved.
  • Lack of automation: If your company is still relying on paperwork and other manual systems, you may be missing a key opportunity to take your business to the next level. A lack of automation can be financially costly, take up too much time, lead to mistakes in data entry, and allow important information to fall through the cracks. On the other hand, the right inventory management system can allow key employees throughout the organization to stay informed and equipped with real-time (and accurate) data. A fully automated and integrated inventory management system is always the best choice.
  • Lack of experienced staff: When you’re running a product-based business, it’s key that all employees involved in inventory management, logistics, and order fulfillment are experienced and trained. Having knowledgeable staff will help your company quickly identify any inventory control problems and prevent them from happening in the first place. On the other hand, inexperienced staff can lead to damaged goods, inaccurate data, and poor business decisions. Remember that staff is at the forefront of inventory issues. Hire individuals you trust and are competent, even if that means paying them more. Furthermore, meet with them regularly to find out what’s working and what’s not.

Tips for solving inventory control issues

Luckily, there are many things your business can do to stay on top of inventory management and avoid the most common inventory control problems. Consider these valuable tips below to help you maximize productivity and profits. 

  • Consider outsourcing: Not all companies have the ability to manage their inventory themselves, especially small businesses who are just getting started. For these retail companies, hiring a third-party company who can expertly handle all of your logistics, inventory management, and order fulfillment can be a smart move. As an added bonus, leaving your inventory control to the experts frees you up to focus on other aspects of your business.
  • Incorporate analytics: In order to avoid common inventory control issues such as understocking and overstocking, all of your business decisions should be data-driven. Utilizing consumer analytics and inventory management KPIs will help your company avoid these issues. The right data allows you to make informed business decisions, forecast for future demand, account for seasonality, track product sales cycles, and maintain accurate inventory levels. Companies should also have a solid understanding of their target customer and current market conditions.
  • Incorporate technology: The use of automation, real-time inventory tracking software, and other technology can help your company stay on top of inventory control. Product visibility is extremely important to avoid understocking, overstocking, and inaccurate stock levels, so consider replacing any outdated systems with the latest solutions. Investing in the latest technology becomes even more important if you are managing your inventory remotely across several locations. Your inventory management system should be able to scale with your business, provide accurate information in real-time, and be accessible to employees throughout your organization anywhere in the world.
  • Invest in employee training: The more skilled and knowledgeable your employees are, the more equipped your company will be to handle logistics, order fulfillment, analytics, forecasting, and inventory management. An investment in the continued education and training of your staff is never wasted.
  • Keep up with trends: Industry knowledge is especially important for retail business owners. In order to make the best business decisions and avoid issues with your inventory levels, be sure to stay up to date with current market conditions and trends.

How Kickfurther can help

A lack of cash flow can hinder many retail companies from ordering the stock they need to remain both competitive and profitable. Kickfurther helps companies secure the funding they need for inventory. As the world’s first online funding platform that enables companies access to funds they are unable to acquire through traditional sources, we understand the struggles small business owners face. 

For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. 

Kickfurther can help startups fund millions of dollars of inventory at costs up to 30% cheaper than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Conclusion

Inventory control is critical for profits, customer satisfaction, and all business operations. In business it’s easy to overlook a few problems, but remember, that one problem will turn into more. If financial restraints are the cause of inventory control issues, take charge. By utilizing inventory funding through Kickfurther combined with staffing the right people and implementing efficient inventory management systems, you can maximize the potential of your business.

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

How Much Inventory Should You Carry?

Posted on by Kaylyn Perry

Overstocking and understocking inventory can create major challenges, especially financially. Businesses should strive to perfect inventory management and forecasting to ensure they stock just the right amount of inventory during all seasons. Hitting the right amount of inventory can even out carrying costs of inventory and make it more manageable. Read on as we explore 7 tips for understanding how much inventory you should carry.

7 Tips for understanding how much inventory you should carry

It’s important for any type of business to understand how much inventory they should carry at any given time. If you have too much inventory on hand, then you may be tying up too much capital in inventory and paying for more warehouse storage than you should. If you do not have enough inventory on hand, then you may be losing out on sales, back ordering items, and developing a bad reputation by giving customers a poor experience.

The ideal situation is to find the perfect stock number for each product that your business offers that considers lead times, customer demand, and all the other factors needed to make accurate inventory demand forecasts. By having accurate inventory demand forecasts, your business can save an incredible amount of time and resources and even automate some processes like purchasing. 

All of this is more easily said than done. And, as a small business owner, you may not have the resources to hire your own supply management team to make these types of inventory-related decisions for you and the benefit of your company. Until you can hire your own in-house supply chain manager, here are seven solid tips to consider to help you understand how much inventory you should carry as a small business owner. 

1. Create an inventory management system

If you’re  a small business owner that needs to maintain a desired level of inventory at all times, the first thing you should  do is to create an inventory management system and invest in various hardware and software as part of that system. 

An effective inventory management system will help you track sales and identify patterns in demand that can help you make purchasing decisions. Inventory needs to be tracked consistently and stock levels need to be adjusted every time a product ships out, is received, or is returned by a customer. 

Once you start to factor in individual lead times and safety stock figures for each of your vendors and their products, then you can start to automate purchasing and other processes within the inventory management system and your overall supply chain. Automation is an incredibly effective way of saving time and resources. 

2. Adjust accordingly for your industry

Your industry and the types of products you sell have a lot to do with how much inventory you should have on hand as well as when you should have more or less of a particular product. The first question you need to ask yourself is does your product expire or has a shelf life. If it does, then your inventory management system needs to take that into account by looking at inventory levels on a daily basis and making purchases based on lead times as well as shelf life times.

If your product does not have a shelf life, inventory management may be a little less complex, however, you still need to adjust accordingly for your industry. 

For example, if you sell winter coats, you may have some seasonality to consider. Seasonality not only applies to winter coats being in high demand during the colder months, but you may also need to consider having extra stock for back-to-school sales, Christmas and the holiday shopping season, spring jackets for the rainy season, and other special promotions you may want to offer. Aside from seasonal demand and special promotions, you will also need to make sure you have plenty of stock for the most common sizes for men, women, and children. Some sizes are going to be much more in demand than others. 

3. Determine inventory and storage cost

One of the most important factors when it comes to inventory levels is the cost. Cost needs to be more than just unit cost. Expenses associated with inventory storage should be considered as well. If you have a large amount of inventory simply sitting in warehouses for long periods of time, it can add up. This is why having an effective inventory management system and accurate inventory demand forecasts are so important for your business.

Aside from the cost per unit and storage expenses, you also need to consider costs associated with inventory disposal if your products have an expiration date. Obviously, the goal is to limit waste as much as possible by selling products before expiration, however, some waste may be inevitable. That being said, the costs associated with this should be factored into your bottom line and purchasing decisions as well. 

4. Know and calculate your inventory turnover ratio

Your inventory ratio is essentially how many times you sold and replaced specific products within a set period of time. Certain industries have different inventory turnover ratios based on the nature of the products they sell, however, a desirable turnover ratio for any business may fall between 4 and 12 over the course of a year. 

5. Know your supplier lead time

Another important factor to consider when making inventory management and purchasing decisions is supplier lead time. Supplier lead time refers to the time it takes for a product to be received from when the purchase order is created to when it is available to ship out to customers. This is important to know for each supplier and for every product that your business offers. 

6. Maintain safety stock

Safety stock is an amount of inventory that acts as a buffer to account for fluctuations in demand and uncertainties like excess demand, supplier delays, inaccurate inventory demand forecasts, delayed purchasing, and financial constraints. By knowing what your safety stock levels are for each product that you sell, you can help to achieve zero order cancellations from simply having not enough inventory to meet demand.

Canceling orders or having to backorder items for customers is a bad business practice that will have customers looking elsewhere for their purchases. Chances are if a customer makes an order on your site and you cancel it due to the item being out of stock, they will find another source and never return to your business again. 

7. Identify and correct inventory management issues

It’s one thing to have an inventory management system in place, however, you also need to be proactive when it comes to addressing issues that come up. For example, if you notice you are always running out of a particular item you may want to investigate to see what the core issue is. Maybe there is a supplier who is behind on production? Or maybe some of the product is arriving damaged and in unsellable condition? These are the types of things you should be proactively investigating to solve issues in your inventory management system

Also, if you find that you have too much inventory of some particular items because of an inaccurate inventory demand forecast, you may need to experiment with different ways to liquidate the inventory. You may need to offer special discounts on certain products or donate some product to charity as a tax write-off to flush out items that are taking up precious storage space and tying up working capital. 

How Kickfurther can help

Oftentimes we try to take shortcuts as a way to overcome challenges. For example, maybe you’ve decided to only stock the amount of inventory you can afford. While this is smart, it may be costing you sales which translates to profits. Finances often get in the way of inventory management, but they don’t have to. Created by an entrepreneur just like you, Kickfurther is committed to providing affordable inventory funding solutions for small business owners. 

Kickfurther is the world’s first online inventory funding platform that enables small businesses to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales. 

Kickfurther can help startups and small businesses fund millions of dollars of inventory at costs up to 30% lower cost than the competition. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. 

Interested in getting funded at Kickfurther? Here are 3 easy steps to get started:

#1. Create a free business account

#2. Complete the online application 

#3. Review a potential deal with one of our account reps & get funded in minutes

Why Your Business Needs a Rolling Cash Flow Forecast

Posted on by Kaylyn Perry

For small- and medium-sized businesses, cash is king. When times are tough, and when the market shifts, steady cash flow and liquidity can help your business continue to pay its expenses and make payroll on time. Even if a business is increasing its sales, it can be doomed to fail if cash flow is not carefully monitored and controlled. In fact, for small- and mediumsized businesses that failed, 60% cite cash flow as a main factor. The solution? Building and maintaining an accurate, rolling 13-week cashflow. A fractional consulting firm can help makes this process even easier by paying half of what you would pay for a full-time CFO.

What is Cash Flow Forecasting?

A cash flow forecast is a plan that shows how much money a business expects to receive in, and pay out, over a given period of time. A typical cashflow forecast is built for a rolling 13-week period.

The main goal of a cashflow forecast is to assist with managing liquidity within an organization, ensuring that the business has the necessary cash to meet its obligations—like payroll and bills—and avoid funding options. Essentially, having a well-built cash flow forecast will let you know where your business’ cash is headed and prevent any unforeseen dips along the way.

What Are The Components of a Forecast?

There are three key components included in a cash flow forecast— estimated likely sales, projected cash in, and projected cash out.

Likely Sales

The easiest way to project likely sales is to look at the business’ sales history over the past few years. In doing this, it’s important to identify any seasonal trends as well as the impact of any promotions or discounts you may have run.

When estimating sales, it’s similarly crucial to take future plans into consideration, such as emerging competition, new product launches, or promotional activity. Additionally, keeping a close eye on the market and any new trends can help your estimations be more accurate.

Cash Out and Cash

In Cash out is more easily measured, since this is the money spent on overhead, bills, payroll, and equipment, among other expenses. Cash in is more difficult to time accurately, as the business essentially has to estimate when their customers will pay them.

It’s important to note that the cash flow forecast is most accurate when “rolling”, meaning that it’s being consistently updated to account for changes week over week. After week one, you return to the forecast during week two to see how accurate you were. Week two then becomes week one, and the forecast is built out for one more week. This way, there are always 13 weeks, or one full quarter, built out. Your forecast will become more accurate as time goes on.

What Are The Benefits of a Cash Flow Forecast?

Though the first and greatest benefit of cash flow forecasting is knowing that you’ll have enough money to pay your expenses, there are several other advantages that come from more closely monitoring your business’ cash, such as: Taking GAAP into Consideration.

Improving Your Financial Management

Forecasting helps you to see upcoming holes in your budget and be able to find a solution in time. By accurately tracking how much you’re able to spend, you can ensure that your vendors, employees, and other financial obligations are always paid on time.

Forecasting can similarly help you to better design your business strategy. If you can forecast when your cash in will be greater than your cash out, you can plan how to use the additional funds to improve your business.

Knowing When to Open a Line of Credit

Once accounts are reconciled, the accountant can then go in and create cash-basis reports retroactively for the months needed. This can include an income statement, balance sheet, or profit and loss.

Ability to Prepare for Growth

Even if your sales are increasing, your business will have difficulty growing unless you have liquidity. A cash flow forecast allows you to first see how much money you’re currently spending on growth; for example, perhaps you needed to hire additional employees or rent a larger warehouse to keep up with sales. Second, the forecast can show when your business will have additional cash, letting you determine how these funds should be used towards growth—such as additional market, new hires, or a new product line. Fractional consulting firms can provide many different financial services to help businesses plan and manage growth.

How Can a Fractional Consulting Firm Help?

The great thing about cash flow forecasts is that you don’t need to hire a full-time accountant to create this tool for your business. Rather, you can contract a fractional consulting firm to build the initial forecast, and your internal accounting department can maintain the rolling forecast week over week. In fact, seeking out fractional executive solutions such as this is often more cost effective in the long term, as you reap the benefits of higher-level analysis while only paying fractional rates.

 

With offices throughout the United States, NOW CFO can prepare your organization for the future by implementing proven financial processes and complete financial visibility. NOW CFO’s outsourced accounting services are available on a fractional, part-time, or as-needed basis. Learn more here.

8 Killer PPC Tips to Boost Sales on Amazon

Posted on by Kaylyn Perry

As an Amazon seller, you are aware that conducting profitable PPC campaigns is essential to promoting your products and increasing sales. But it can be challenging to make your campaign stand out, from the competition on Amazon. Here are our top 8 tips and tricks to boost your sales on Amazon.

Optimize listings with the right keywords

Make a thorough list of keywords. Fill up the Amazon search bar with a range of phrases and words. Then, examine the drop-down suggestions, and begin compiling a list of suitable keywords for similar listings. Alternatively, you can use a keyword research tool to find relevant keywords with search volume, relevance, and other parameters. 

Optimize your product listing, including title, product descriptions, keywords, etc. Search engines seek to offer the most relevant results, whatever the traffic is. That means Amazon shows ads that do not match a user’s search query. This makes it important to include your keywords in your product listings to build relevance.

Keyword stuffing, often known as keyword repetition, may be harmful and unproductive. So avoid stuffing keywords in listings.

By doing this, you have similar keywords in your listing and PPC, which further improves the position of the ad.

Acquire product reviews before you launch PPC

Product reviews are important as they serve as social proof on Amazon. The Amazon algorithm favors products with good reviews. We recommend you get at least 10 reviews before you launch your ad campaigns. Besides, reviews will have a positive impact on conversion rate, positioning, and paid CTR.

Selling high-quality products, exceeding your customers’ expectations in terms of quality and customer service, and working hard to establish a brand are the best ways to get reviews. Combine this with several touch points to ask for reviews, such as a product insert and the Request a Review button on your Orders page.

Find and bid on long-tail keywords

Long-tail keywords are more specific than regular ones and receive less search traffic, but they are also easier to rank. They will have low search volume, low competition, and can have a higher conversion rate. Often, they are less expensive to bid on. 

Many merchants use an aggressive PPC approach that focuses on high-volume keywords. Usually, this has a significant negative impact on ad spending. A keyword’s CPC is greater when there is intense competition. In long tail keywords, the CPC is lower because there is less competition. Adding them helps you lower your ACoS and increase conversions.

Set effective goals for your campaign

Your PPC goals will be easier to set if you are aware of your business goals, especially for certain campaigns. Depending on business goals like new product launches, liquidation, etc., you need to set your campaign goals.

For example, depending on the overall profit margin, you can set a high ACoS if you are planning to liquidate old inventory.

Add Negative Keywords

Negative keywords stop your Amazon ad campaigns from showing up in search results for similar but unrelated product searches. In this way, your products will show up for relevant searches improving your chances of conversion. This reduces overall ad spend and improves the performance of your ads.

Look out for keywords that get a lot of clicks but no conversions. They use up your advertising spend with very little return. Consider marking those keywords as negative. Optimizing negative keywords can help you create more successful advertising campaigns. Besides, it increases your click-through rate and conversions. 

Competitor targeting

You can use Amazon Sponsored Ads to target your competition. Run manual ads on Amazon for the same group of keywords used by your competitors. You can bid on your competitors’ keywords so your ads will appear on page one of the search results when a customer searches for a competitor’s product. 

This is a great strategy to increase your visibility and sales. Use SellerApp’s keyword tracking tool to find your competitors’ keywords and track their performance over time.

Another method to target your competitors is to aim for their products rather than the keywords. You can use the Product Attribute Targeting (PAT) feature to target your competitors’ ASINs. 

Use search term report to find keywords

Amazon offers an extensive set of reports under advertising. These include Search term reports, advertising product reports, targeting reports, and more. From the search term report, choose the appropriate keywords that generate sales, which results in an increased conversion rate. Add these keywords to your existing campaigns.

High-value keywords are terms where the brand will pay a higher price to bid because they can result in a better outcome in sales. These terms can create a high revenue in your business.

You can also get the search term report from Amazon in order to find how the consumers are finding your products on Amazon and find the keywords that are getting the most traffic and sales to your business. Additionally, make sure to sort the report by conversion rate to find terms with low traffic but high sales potential.

PPC Automation

Regularly monitoring your bids, keywords, and campaigns is crucial for optimizing your PPC campaign. You can save hours of manual labor by automating your Amazon PPC campaigns, allowing you to focus your attention on other aspects of business, such as product research, inventory control, and other marketing strategies. PPC automation helps you save time and grow your business. 

Through SellerApp’s automation feature, you can choose the rule templates such as ROI Optimizer, Keyword Harvester, and Money Saver. 

  • If you want to use a negative keyword strategy, you can use Money Saver.
  • You can choose ROI Optimizer if you want to maximize profits for your target ACoS.
  • If you want to improve impressions, conversions, and visibility, use Keyword Harvester.

Your bids will be optimized by SellerApp’s algorithms to reach more potential consumers.

The algorithms will begin to run when you select the template and provide the necessary metrics, which will be reviewed by SellerApp’s experts. However, it’s important to get the fundamentals correct if you want Amazon PPC automation to function. 

You can check out this link to try SellerApp PPC automation.

Conclusion

Results won’t come right away. Wait to see some results on your campaign. The most important results will be conversion, ACoS, impressions, etc. So by monitoring those, you will be able to adjust your bid price to get an ideal level of sales.

Author Bio

Arishekar N, is the Senior Director of Marketing and Growth at SellerApp, an e-commerce data analytics solution. He is responsible for overseeing the development and implementation of marketing strategies, as well as increasing process efficiency by executing cutting-edge Search Engine Optimization strategies at SellerApp.