June 11, 2025 • 25 mins
If managing your stock feels like a total guessing game, you’re not alone. And it’s not your fault. In this episode, I’m breaking down why so many product business owners feel completely overwhelmed by stock decisions and what you can start doing about it.
We’re talking about:
- Why “gut instinct” isn’t a stock strategy
- The silent cost of overbuying (or underbuying) stock
- How to break out of the cash flow hamster wheel
And if this hits home for you, I’ve got something that will help…
🎉 Join me for a free talk on Monday, 16th June at 10:00 AM. It’s called Stop Letting Stock Eat Your Profit. In this free session, I’ll show you three quick fixes that can immediately help you feel more in control of your stock.
👉 https://futureretail.lpages.co/stop-stock-eating-profit/
Resources
Webinar: Stop Letting Stock Eat Your Profit
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
Let me know if any of this resonates.
(00:02):
When it comes to your stock, youfeel like you are flying blind.
You are buying things based on what'sin your bank account at the moment,
or what you think looks interesting.
You don't really know whetheror not what you're doing is
the right thing to be doing.
You're just generally feeling alittle bit less than confident
when it comes to your stock, andmaybe you are wondering, is it me?
(00:24):
Am I just not very good atthis running a business thing?
Or maybe I should leaveit to the big guys.
Maybe they're the ones who'vegot the teams and the systems in
place, and maybe I shouldn't betrying to figure this stuff out.
Or maybe you're just generally surprisedthat trying to figure out how much
stock to have in your business isnot as straightforward as perhaps you
thought when you first got started.
(00:44):
Hi.
I am Catherine Erdly, small business andretail expert and founder of the Resilient
Retail Club, which is my business thathelps product businesses manage their
stock and grow their profits and salesthrough a variety of different offers.
You can head over toresilientretailclub.com and find out more.
But one of the things that I am mostpassionate about when it comes to helping
(01:05):
small businesses is stock management.
And the reason for that is becauseI think that this is an area that is
so underserved when it comes to thesmall business community, there is
so little information about it thatI really feel like this is kind of
my mission to help people understandas much as possible about how the
(01:25):
stock that they buy has an impact onthe profitability of their business.
And one of my biggest bug bears is thatso much information that is out there for
small businesses, so much general businessinformation is aimed at service business
owners, who have a completely differentcost base than product business owners.
And so a lot of information thatyou're given just doesn't really tackle
(01:49):
this huge issue for a lot of people,which is how do you manage the most
expensive thing in your business?
For most people, the thingthat they spend the most on in
their business is their stock.
Yes, you may be spending alot of money on employees.
You may be spending a lotof money on advertising.
You probably have fulfillmentfees or fees to do with your rent
(02:10):
or your location, your premises.
But for most people, the thingthat they spend the most amount
of money on is their stock.
So it's no real great surprise thatnot feeling in control of your stock
can make you feel completely out ofcontrol with your whole business.
(02:30):
Welcome to the Resilient Retail GamePlan, a podcast for anyone wanting to
start, grow or scale a profitable creativeproduct business with me, Catherine Erdly.
The Resilient Retail Game Plan isa podcast dedicated to one thing,
breaking down the concepts and toolsthat I've gathered from 20 years in
the retail industry and showing youhow you can use them in your business.
(02:54):
This is the real nuts and bolts ofrunning a successful product business,
broken down in an easy, accessible way.
This is not a podcast about learninghow to make your business look good.
It's the tools and techniques that willmake you and your business feel good.
Confidently plan, launch, and manageyour products, and feel in control of
(03:14):
your sales numbers and cash flow to helpyou build a resilient retail business.
So one of the things that happensis every single week when I talk to
business owners, whether it's people inmy one-to-one program, Retail by Design,
people who are in my membership group, TheResilient Retail Club, or people that I'm
(03:38):
talking to about my done for you service,Stock Doctor, one thing that comes
up over and over again is people say,
" I'm just winging it.
I just don't feel confidentin how to place numbers.
I don't know how to forecast.
I don't know how to figure it out."And actually, I remember somebody
telling me that they'd gone to asession run by quite like a big
(03:58):
agency for e-commerce businessesand their rapid growth business.
And they went and they wanted tofigure out how much they should
order for their Black Friday stock.
And they went to this event after theperson did their talk about Black Friday,
they went to them and said, well, how do Ifigure out exactly how much I should buy?
And the person said, oh, youjust have to go off gut instinct.
(04:20):
It's kind of funny and kind of, well,it's funny to me because obviously
I know the answer is you don't justhave to go off gut instinct, but
it just really highlights to me howlittle information that there is
out there about managing your stock.
I just wanna say, if you feel likeyou don't know what you're doing with
your stock, or you're feeling likeit's tricky, then you are not alone.
And really, ultimately what it boilsdown to is that stock management is
(04:43):
actually an extremely niche skill.
When I think about my background,so I graduated in the year 2000.
I started working in the retail industry.
My very first job was for LauraAshley, and I then trained for the
next, you know, nearly 20 years.
So 18 years in total.
I was working on stock management,sales strategy, profitability.
(05:04):
That was what I did for big retailers.
But you know, especially those firstfive, six years, I was very much
learning the ropes, like learningand understanding how it all worked.
And it was extremely niche.
It's a niche within the retail industry.
It's a niche skill.
It's not something that a lot ofpeople know about, but yet it actually
(05:25):
makes or breaks a retail business.
Retail businesses really needthat stock control element.
It's really crucial because if youdon't have your stock under control,
then it doesn't really matterwhat you do with everything else.
It doesn't matter how great youradvertising is or your marketing
if you either keep running out ofstock, or you have too much stock.
(05:47):
Either one of those things canbe really, really disastrous.
So I have got just a note as well.
I have got a free talk coming up whereI go into this in much more detail.
So if you're interested in this subject,then do go check out the show notes.
We're going to talk, I'm gonna popthe link into the show notes, but.
I just really want to highlight thefact that this is not something that
(06:08):
you are the only one who feels this way.
A lot of people I talk to talk aboutthings like feeling on a hamster wheel,
so money comes in from sales, but thenhas to go out immediately for stock.
Or they talk about just not knowinghow they're going to cover invoices
or having to work around at what pointdo you take finance, for example,
(06:28):
to cover an invoice that you knowthat you'll sell if you buy it.
But you have to have the faith to reallybelieve you're gonna sell it, to actually
put that money up front, and so it can endup feeling just like this complete, like
I said, hamster wheel, like this feelingof not really knowing what's going on.
And then that starts manifestingitself in the business.
(06:51):
Typically, what I see isone of two things happen.
People get really nervous about reallygoing into their bestsellers and enough
depth, so they keep running out ofthem, and therefore that means that
sales slow down or they get patchyand then they really struggle to kind
of maintain the sales that they want.
Or the other thing that happens isbecause people are so nervous about
(07:12):
running out and they're absolutelyadamant, they don't want to run out
of things, they end up overbuying.
And this is something that I've beenhaving quite a few conversations with
people about this recently because theydidn't really know what was driving
their sales, they didn't really knowwhat they needed, they absolutely must
have in stock to maintain their sales.
They just basically bought more ofeverything because they had this real
(07:35):
fear that if they didn't have enoughstock, they wouldn't have enough sales.
And so the fear of running out meantthat they were overbuying, which
then meant that their cash flowwas really tight and just generally
meant that the business felt a lotmore stressful than it needed to be.
These are some of those symptoms,you know, overstocked, you can
also have overstocked shelves andstill run out of your best sellers.
(07:55):
That's the kind of bit where it getsreally tough because your shelves are
generally overstocked and your money'sall tied up in your stock and you just
don't have the cash available to replenishyour bestsellers, then that starts to
become really, really tricky as well.
And that's a lot of the time when peopleget themselves into a tough place.
They get themselves wherethey're feeling really stressed.
(08:17):
They've got orders that theyneed to place, but they're, they
just don't have the money for it.
Or they just don't really know.
Am I doing this right?
Am I heading in the right direction?
They start doubting themselvesand they start losing confidence,
and also everything just startsto feel a lot more difficult.
It feels like the business is runningyou and not the other way 'round.
So if you are listening tothis, and this sounds familiar.
(08:39):
If you're thinking yes, I felt like that.
Yes, I feel like I'm flying blind a littlebit without, or a lot with my stock.
Then I just wanted tosay this is very common.
And I would say that you don't need tofeel bad about the fact that you don't
(09:00):
know how to manage stock because itfeels like it should be easy, right?
Most people, I'm sure, who don'trun product businesses who look
at them from the outside must say.
Well, okay, well how hard can it be?
You buy, you buy stuff and you sell it.
But we all know that it's alot more complex than that.
And it can get to the point whereyou suddenly realize, well actually
it's a lot more complex than this.
(09:21):
And where do I, how do I figure it out?
So that is also the reason behindme writing my book, Tame Your Tiger.
So again, if you want to reallydelve into stock management, then
definitely go check that out.
But I think the key thing is to saythat even people who have a background
in retail often don't actuallyunderstand the stock management and
(09:43):
I've mentioned this before, but in bigretailers you have three product teams.
You have the buying team, you have thedesign team, you have the merchandising
team, and the buying team and designteam are fairly self-explanatory.
They are there to be the ones whoare excited about the product.
The design gives you the direction theycreate, what it actually looks like.
(10:03):
Buying is all about being commercial,working out what the customer
wants, and then negotiating with thefactories, and really getting everything
basically ready to the point thatit's ready to ship to the stores.
And then merchandising not only takes overand getting the stock out to the stores
or online, depending on where you work,but also everything to do with trading it.
(10:25):
So how much you should buy, when youshould buy it, when it should come
in, what you should sell it for,what your profit margin should be.
And then if it's not moving,what you gonna do about that?
So merchandising do a lot of the trading.
And the thing to say is that Ipretty regularly come across people
(10:45):
who have been buyers or designers.
Product developers who have worked inthe retail industry and have worked
with merchandising teams and have thenleft and started their own business
because they've got those skills,they've got that commercial aptitude,
they've got that ability to createproducts, they've got that eye for it.
And then they've really, really struggledwith the stock management piece.
(11:07):
So even the people who work inthe teams with the merchandising
team don't necessarily have thoseskills inherent in them, even though
they've worked with people dayin, day out for many years who do.
So what I'm trying to say is, if you'venever worked in retail, if you've
got a background in marketing, PR, ifyou've been a teacher or a doctor or
(11:29):
a lawyer, or any of the other millionsof different things that people do
before they start their own business,then the chances of you having in-depth
knowledge of how to manage your stockeffectively is pretty, it's pretty slim.
So again, don't start from a pointof saying, oh, I should know this
stuff because honestly, there isn'tthat much information out there.
(11:51):
Again, that's why I wrote the book.
That's why I do what Ido a lot of the time.
But also just to say that it is somethingthat you can learn and you know you're
not feeling stuck because you're notsmart and you're not feeling stuck because
you're not a phenomenal business owner.
Because to be honest, there's also lotsof pieces of the puzzle that I always
(12:11):
felt like you know, to develop product,to identify the correct product, to really
understand your customer like the designand the buying teams do, that's something
that is really, really difficult.
And sometimes you would find people whoare brilliant at the numbers, but really
struggled with the product side of things.
So I would say that don't feel like it'sa failing on your part, it's just that you
(12:32):
have to do all three of those jobs, right?
You have to.
Be really excited about the directionof the product you have to get the
product in, negotiate it like abuyer, and you have to manage it.
Whereas in retailers, they do have theopportunity to have those different
roles and the different types of peoplewho like to be in those different
(12:53):
roles, whereas you have to be allof those things rolled into one.
It's not that you're stuckbecause you're not smart.
You are not feeling stuck because you'renot a phenomenal business owner with an
amazing eye for product and really greatat understanding what your customer wants.
You are feeling stuck becauseyou don't have a system in place.
You know, what do people tend to dowhen they don't have a system in place?
(13:15):
They tend to rely too heavilyon what they think that they
would like for the business.
So, I hear this a lot from peoplewho have bricks and mortar stores.
They get really suckedinto buying for them.
Which, you know, is not a terrible,terrible idea in itself, especially
if you are your own ideal customer.
And also because it's nice, Ithink, for a business, especially
when it's a curated business.
(13:36):
In other words, you're buyingfrom lots of different places.
It is nice for the curationto have the point of view of
the person who is curating it.
But, the problem is if you're buyingtoo much on instinct and not enough
on the data, you can just end upmissing some really glaring issues.
Also, supply pressure, dependson the model that you're at.
(13:57):
You know, some people, if you aredeveloping your own products is
probably doesn't happen as much.
But especially if you're somebody who buysin product from other people, then you may
well find this, that you are being steeredor pushed around by the product suppliers,
and it depends on your sector, but someof them are more predatory than others.
And in fact, one story that somebodytold me that really I mean, I think
(14:19):
summed this whole thing up, was that Idid some work with a fashion boutique.
They were part of myRetail By Design program.
We did a lot of work on how muchstock they actually should have in the
business, when it should be coming in.
We worked on their stockplan, put it all together.
And then they had a series of buyingappointments and they went into the
(14:41):
showroom and they started talkingto one of the suppliers and they
said, right, this is our budget.
This is how much we'd like to spend.
And the supply basically laughedand said, oh, you small businesses,
you never really have budgets.
So basically almost like admitting thatthe way that they sold was to disregard
how much the small business actuallyshould have or needed to have, but
(15:02):
basically was like, oh, I know that ifI just wave enough amazing product under
your nose, you'll end up buying it.
So that's something that happensif you don't have a system.
You can end up gettingswayed by pushy salespeople.
As I said, less of an issueperhaps if you are somebody who is
manufacturing your own products.
Although sometimes manufacturerscan be pushy too, so it's something
(15:23):
that leaves you vulnerable if youdon't have a plan and don't have
a really clear way of saying,actually, I need to have this budget.
This is what I'm going to spend.
And because you are not ahundred percent dead certain.
That's how much you should have.
Then you can end up beingswayed by other people.
So that is the issue.
If you don't have a simple system tokeep you on track, you can end up in
(15:47):
either this analysis paralysis whereyou're not really sure what to buy, or
you end up being too swayed by otherpeople, or you end up just making
decisions based on not exactly a whim.
But like a kind of a gut feel or I thinkthis is probably what I want, or you can
end up feeling really scatter gun, or I'mgonna try this and I'm gonna try that.
And it doesn't feel in control.
(16:09):
It feels very governed by howmuch money you've currently got.
And it's not related to things like whatyour sales are going to be in the future.
And it just feels a lot moread hoc and a lot more winging
it, for want of a better word.
So what are the issueswith this in the business?
Well, apart from the stress level,because to be honest, this is one of
(16:29):
the things that causes a lot of stressfor people, especially as they grow.
Founders who are growing, who don't havea really strong control over their stock
often find it super stressful becausethey have to make bigger decisions.
The numbers go up, the amountthat their spending goes up.
And when they were spending a smallamount of money, they could justify
(16:52):
it say, well, I'll try this and if itdoesn't work, I can get figure it out.
But then as the numbersgo up, it gets more scary.
So there's the impact, there'sthe mental impact on the founders,
which is not insignificant.
It's something that I see a lot anda lot of the time when I'm talking to
people on sales calls to talk aboutRetail by Design or Stock Doctor, my
done for you stock management service.
(17:12):
I can see the stress that they're under.
I can see how it's waking them upin the middle of the night and it's
just generally not a nice feeling.
I believe there's a big financial costas well, and making mistakes with what
you're purchasing because you purchasedwithout a real clear, strong strategy.
That is probably one of the mostexpensive mistakes that I see
(17:32):
people make on an ongoing basis.
They have stock that issitting in the wrong place.
Now, it's worth reiterating thatany retail business that you look
at is going to have fast movingstock and slow moving stock.
So every single business that I'veever worked in, if you looked at the
80-20 rule where you say 80% of yoursales will be coming from just 20%
of your stock (17:57):
this always happens.
This happens whether the businessis a $2 billion turnover business
or whether it is a businessturning over 30,000 pounds a year.
There will be a disproportionate amountof sales coming from a few products.
Or if you buy one-offs, lots of vintage,you will get a disproportionate amount
(18:18):
of sales coming from a few product types.
This always happens.
You cannot really have a businesswhere all of the stock sells equally.
I'm yet to see anythingthat even comes close.
There's always some real outperformers.
But then the difference is, so it's notabout saying, oh, well, unless I can
(18:39):
get all the stock to sell equally, thenI must be doing something really bad.
The name of the game is, how do youdrop your stock levels to the point at
which you are not losing sales, but youalso don't have too much money tied up
in dead stock, and that is the thing.
So that is probably the biggestfinancial cost of not having a
(19:00):
plan, not having a clear idea, isyou have too much stock or you have
too much stock in the wrong place.
Loss sales is the other piecethat is really damaging.
If you have got your best sellers,but you're not backing them in enough
depth because you don't have a reallyclear plan and have it all mapped out.
Lost sales is really,really tricky as well.
And that confidence cost.
(19:21):
As I said, anytime you make anerror or you feel like you've got
too much stock tied up, then it canchip away at your trust in yourself.
And then it also just bleeds.
The stress can bleed into a lot ofdifferent areas of the business,
especially if it's having an impacton your cash flow, and it just starts
to all feel a bit more difficult.
The difference being when I workwith people on their stock, then
(19:44):
they feel generally much calmer.
They feel more in controland they feel confident.
So sometimes for the first time, theyfeel like they can make decisions in the
business and be really able to see theimpact of them, which to me is hugely
empowering and you know, really, reallyrewarding When I see people go from
feeling completely out of control becauseof these large amounts of money going
(20:08):
out of their bank account at differenttimes to feeling really considered with
what they're doing with their purchasing,and really strong and confident.
So what do you actually need?
Really what you need is somethingsimple to help you understand where
(20:29):
you need to be spending your money andhow much money you need to be spending.
So I always say that You stock planshould start with your sales plan.
So the first thing you really needto understand is, okay, what am I
actually aiming for in terms of sales?
And then once you have that, youcan build up what your stock plan
should be, and then you are able tocreate yourself a budget for stock.
(20:51):
Having a budget for stock is a gamechanger because it gives you a finite
amount of money that you are reallyprepared to spend on a particular
month on your stock as opposed tofeeling like it's this endless pile.
And it also hopefully puts you reallyclearly gets it really clear in your
head that it's not just about havingas much stock as possible, it's about
having the right stock in the rightplace at the right time, which is one of
(21:14):
those merchandising mantras that you arebasically taught on day one of the job.
Right stock, right place, right time.
So you need to have a framework,and I'm a big believer in putting
together a simple framework thatis not difficult to understand.
That is something thatis easy to maintain.
(21:37):
That is essentially, the kind of, thelong and the short of it is you need
to have a budget for your stock eachmonth and you need to have an idea of
where you should be focusing that money.
Switch from thinking that it's an infiniteamount, or you can spend as much money as
you've got in your bank account saying,no, this is how much money I should have.
(21:57):
And therefore, I'm going tobe really directional and this
is where I'm going to spend it.
And making those two tweaks can helpyou go from feeling completely
out of control, to feeling muchmore in control and focused.
You don't want something thatis going to take you hours
and hours and hours to update.
(22:18):
You want something at the veryleast top level you want something
that you can manage yourself.
And so, it takes away the guesswork andit just helps you look at your stock in
a different way and helps you get reallyclear on, as I said, what you should be
spending, how much you should be spending,and what you should be spending it on.
(22:40):
So giving product business owners thatcontrol, helping them feel confident, as
I said, it's absolutely what I love to do.
It is what motivates me, and I really dotruly believe that anybody, even if they
don't consider themselves to be a numbersperson, can get themselves to a point
where they feel much more in control abouttheir stock, that they feel much clearer
about where they want to go, and theycan have that confidence back in terms
(23:06):
of I'm spending the right amount of moneyand I'm spending it on the right things.
It's just about a shift in perspectivemore than it's about complicated sums.
So if you've enjoyed today'sepisode and you'd like to know more
about managing your stock, I amgoing to be running a free talk.
This is happening on Monday, the 16th ofJune at 10:00 AM and the title of the talk
(23:29):
is Stop Letting Stock Eat Your Profit.
We're going to break down what'sbeen going wrong with your stock and
show you how to start fixing it, andit's totally free and I promise it
is going to be well worth your time.
No jargon, no shame, just an ideaof how you can make three quick
fixes to help start improving yourstock management in that week.
(23:51):
Because I know how busy you are.
I know you don't have the time forthis, so I wanted to show quickly how
you can get a handle on your stockand start making better decisions.
So in summary then, it's not about you.
It's about having a system,but that's the good news.
You can have a system.
It doesn't have to be super complicated.
You can start making a differenceand start feeling more in control
(24:13):
of your stock, and I'd love to help.
So check out the show notes where youcan find out more details about the talk.
And then if you have a moment torate and review the podcast, it
makes a huge difference to gettingit out there in front of more people.
And of course, if you like, followand subscribe, you'll be the first
to know about each new episode, whichcomes out every Thursday morning.
See you next week.
Let me know if any of this resonates.
(00:02):
When it comes to your stock, youfeel like you are flying blind.
You are buying things based on what'sin your bank account at the moment,
or what you think looks interesting.
You don't really know whetheror not what you're doing is
the right thing to be doing.
You're just generally feeling alittle bit less than confident
when it comes to your stock, andmaybe you are wondering, is it me?
(00:24):
Am I just not very good atthis running a business thing?
Or maybe I should leaveit to the big guys.
Maybe they're the ones who'vegot the teams and the systems in
place, and maybe I shouldn't betrying to figure this stuff out.
Or maybe you're just generally surprisedthat trying to figure out how much
stock to have in your business isnot as straightforward as perhaps you
thought when you first got started.
(00:44):
Hi.
I am Catherine Erdly, small business andretail expert and founder of the Resilient
Retail Club, which is my business thathelps product businesses manage their
stock and grow their profits and salesthrough a variety of different offers.
You can head over toresilientretailclub.com and find out more.
But one of the things that I am mostpassionate about when it comes to helping
(01:05):
small businesses is stock management.
And the reason for that is becauseI think that this is an area that is
so underserved when it comes to thesmall business community, there is
so little information about it thatI really feel like this is kind of
my mission to help people understandas much as possible about how the
(01:25):
stock that they buy has an impact onthe profitability of their business.
And one of my biggest bug bears is thatso much information that is out there for
small businesses, so much general businessinformation is aimed at service business
owners, who have a completely differentcost base than product business owners.
And so a lot of information thatyou're given just doesn't really tackle
(01:49):
this huge issue for a lot of people,which is how do you manage the most
expensive thing in your business?
For most people, the thingthat they spend the most on in
their business is their stock.
Yes, you may be spending alot of money on employees.
You may be spending a lotof money on advertising.
You probably have fulfillmentfees or fees to do with your rent
(02:10):
or your location, your premises.
But for most people, the thingthat they spend the most amount
of money on is their stock.
So it's no real great surprise thatnot feeling in control of your stock
can make you feel completely out ofcontrol with your whole business.
(02:30):
Welcome to the Resilient Retail GamePlan, a podcast for anyone wanting to
start, grow or scale a profitable creativeproduct business with me, Catherine Erdly.
The Resilient Retail Game Plan isa podcast dedicated to one thing,
breaking down the concepts and toolsthat I've gathered from 20 years in
the retail industry and showing youhow you can use them in your business.
(02:54):
This is the real nuts and bolts ofrunning a successful product business,
broken down in an easy, accessible way.
This is not a podcast about learninghow to make your business look good.
It's the tools and techniques that willmake you and your business feel good.
Confidently plan, launch, and manageyour products, and feel in control of
(03:14):
your sales numbers and cash flow to helpyou build a resilient retail business.
So one of the things that happensis every single week when I talk to
business owners, whether it's people inmy one-to-one program, Retail by Design,
people who are in my membership group, TheResilient Retail Club, or people that I'm
(03:38):
talking to about my done for you service,Stock Doctor, one thing that comes
up over and over again is people say,
" I'm just winging it.
I just don't feel confidentin how to place numbers.
I don't know how to forecast.
I don't know how to figure it out."And actually, I remember somebody
telling me that they'd gone to asession run by quite like a big
(03:58):
agency for e-commerce businessesand their rapid growth business.
And they went and they wanted tofigure out how much they should
order for their Black Friday stock.
And they went to this event after theperson did their talk about Black Friday,
they went to them and said, well, how do Ifigure out exactly how much I should buy?
And the person said, oh, youjust have to go off gut instinct.
(04:20):
It's kind of funny and kind of, well,it's funny to me because obviously
I know the answer is you don't justhave to go off gut instinct, but
it just really highlights to me howlittle information that there is
out there about managing your stock.
I just wanna say, if you feel likeyou don't know what you're doing with
your stock, or you're feeling likeit's tricky, then you are not alone.
And really, ultimately what it boilsdown to is that stock management is
(04:43):
actually an extremely niche skill.
When I think about my background,so I graduated in the year 2000.
I started working in the retail industry.
My very first job was for LauraAshley, and I then trained for the
next, you know, nearly 20 years.
So 18 years in total.
I was working on stock management,sales strategy, profitability.
(05:04):
That was what I did for big retailers.
But you know, especially those firstfive, six years, I was very much
learning the ropes, like learningand understanding how it all worked.
And it was extremely niche.
It's a niche within the retail industry.
It's a niche skill.
It's not something that a lot ofpeople know about, but yet it actually
(05:25):
makes or breaks a retail business.
Retail businesses really needthat stock control element.
It's really crucial because if youdon't have your stock under control,
then it doesn't really matterwhat you do with everything else.
It doesn't matter how great youradvertising is or your marketing
if you either keep running out ofstock, or you have too much stock.
(05:47):
Either one of those things canbe really, really disastrous.
So I have got just a note as well.
I have got a free talk coming up whereI go into this in much more detail.
So if you're interested in this subject,then do go check out the show notes.
We're going to talk, I'm gonna popthe link into the show notes, but.
I just really want to highlight thefact that this is not something that
(06:08):
you are the only one who feels this way.
A lot of people I talk to talk aboutthings like feeling on a hamster wheel,
so money comes in from sales, but thenhas to go out immediately for stock.
Or they talk about just not knowinghow they're going to cover invoices
or having to work around at what pointdo you take finance, for example,
(06:28):
to cover an invoice that you knowthat you'll sell if you buy it.
But you have to have the faith to reallybelieve you're gonna sell it, to actually
put that money up front, and so it can endup feeling just like this complete, like
I said, hamster wheel, like this feelingof not really knowing what's going on.
And then that starts manifestingitself in the business.
(06:51):
Typically, what I see isone of two things happen.
People get really nervous about reallygoing into their bestsellers and enough
depth, so they keep running out ofthem, and therefore that means that
sales slow down or they get patchyand then they really struggle to kind
of maintain the sales that they want.
Or the other thing that happens isbecause people are so nervous about
(07:12):
running out and they're absolutelyadamant, they don't want to run out
of things, they end up overbuying.
And this is something that I've beenhaving quite a few conversations with
people about this recently because theydidn't really know what was driving
their sales, they didn't really knowwhat they needed, they absolutely must
have in stock to maintain their sales.
They just basically bought more ofeverything because they had this real
(07:35):
fear that if they didn't have enoughstock, they wouldn't have enough sales.
And so the fear of running out meantthat they were overbuying, which
then meant that their cash flowwas really tight and just generally
meant that the business felt a lotmore stressful than it needed to be.
These are some of those symptoms,you know, overstocked, you can
also have overstocked shelves andstill run out of your best sellers.
(07:55):
That's the kind of bit where it getsreally tough because your shelves are
generally overstocked and your money'sall tied up in your stock and you just
don't have the cash available to replenishyour bestsellers, then that starts to
become really, really tricky as well.
And that's a lot of the time when peopleget themselves into a tough place.
They get themselves wherethey're feeling really stressed.
(08:17):
They've got orders that theyneed to place, but they're, they
just don't have the money for it.
Or they just don't really know.
Am I doing this right?
Am I heading in the right direction?
They start doubting themselvesand they start losing confidence,
and also everything just startsto feel a lot more difficult.
It feels like the business is runningyou and not the other way 'round.
So if you are listening tothis, and this sounds familiar.
(08:39):
If you're thinking yes, I felt like that.
Yes, I feel like I'm flying blind a littlebit without, or a lot with my stock.
Then I just wanted tosay this is very common.
And I would say that you don't need tofeel bad about the fact that you don't
(09:00):
know how to manage stock because itfeels like it should be easy, right?
Most people, I'm sure, who don'trun product businesses who look
at them from the outside must say.
Well, okay, well how hard can it be?
You buy, you buy stuff and you sell it.
But we all know that it's alot more complex than that.
And it can get to the point whereyou suddenly realize, well actually
it's a lot more complex than this.
(09:21):
And where do I, how do I figure it out?
So that is also the reason behindme writing my book, Tame Your Tiger.
So again, if you want to reallydelve into stock management, then
definitely go check that out.
But I think the key thing is to saythat even people who have a background
in retail often don't actuallyunderstand the stock management and
(09:43):
I've mentioned this before, but in bigretailers you have three product teams.
You have the buying team, you have thedesign team, you have the merchandising
team, and the buying team and designteam are fairly self-explanatory.
They are there to be the ones whoare excited about the product.
The design gives you the direction theycreate, what it actually looks like.
(10:03):
Buying is all about being commercial,working out what the customer
wants, and then negotiating with thefactories, and really getting everything
basically ready to the point thatit's ready to ship to the stores.
And then merchandising not only takes overand getting the stock out to the stores
or online, depending on where you work,but also everything to do with trading it.
(10:25):
So how much you should buy, when youshould buy it, when it should come
in, what you should sell it for,what your profit margin should be.
And then if it's not moving,what you gonna do about that?
So merchandising do a lot of the trading.
And the thing to say is that Ipretty regularly come across people
(10:45):
who have been buyers or designers.
Product developers who have worked inthe retail industry and have worked
with merchandising teams and have thenleft and started their own business
because they've got those skills,they've got that commercial aptitude,
they've got that ability to createproducts, they've got that eye for it.
And then they've really, really struggledwith the stock management piece.
(11:07):
So even the people who work inthe teams with the merchandising
team don't necessarily have thoseskills inherent in them, even though
they've worked with people dayin, day out for many years who do.
So what I'm trying to say is, if you'venever worked in retail, if you've
got a background in marketing, PR, ifyou've been a teacher or a doctor or
(11:29):
a lawyer, or any of the other millionsof different things that people do
before they start their own business,then the chances of you having in-depth
knowledge of how to manage your stockeffectively is pretty, it's pretty slim.
So again, don't start from a pointof saying, oh, I should know this
stuff because honestly, there isn'tthat much information out there.
(11:51):
Again, that's why I wrote the book.
That's why I do what Ido a lot of the time.
But also just to say that it is somethingthat you can learn and you know you're
not feeling stuck because you're notsmart and you're not feeling stuck because
you're not a phenomenal business owner.
Because to be honest, there's also lotsof pieces of the puzzle that I always
(12:11):
felt like you know, to develop product,to identify the correct product, to really
understand your customer like the designand the buying teams do, that's something
that is really, really difficult.
And sometimes you would find people whoare brilliant at the numbers, but really
struggled with the product side of things.
So I would say that don't feel like it'sa failing on your part, it's just that you
(12:32):
have to do all three of those jobs, right?
You have to.
Be really excited about the directionof the product you have to get the
product in, negotiate it like abuyer, and you have to manage it.
Whereas in retailers, they do have theopportunity to have those different
roles and the different types of peoplewho like to be in those different
(12:53):
roles, whereas you have to be allof those things rolled into one.
It's not that you're stuckbecause you're not smart.
You are not feeling stuck because you'renot a phenomenal business owner with an
amazing eye for product and really greatat understanding what your customer wants.
You are feeling stuck becauseyou don't have a system in place.
You know, what do people tend to dowhen they don't have a system in place?
(13:15):
They tend to rely too heavilyon what they think that they
would like for the business.
So, I hear this a lot from peoplewho have bricks and mortar stores.
They get really suckedinto buying for them.
Which, you know, is not a terrible,terrible idea in itself, especially
if you are your own ideal customer.
And also because it's nice, Ithink, for a business, especially
when it's a curated business.
(13:36):
In other words, you're buyingfrom lots of different places.
It is nice for the curationto have the point of view of
the person who is curating it.
But, the problem is if you're buyingtoo much on instinct and not enough
on the data, you can just end upmissing some really glaring issues.
Also, supply pressure, dependson the model that you're at.
(13:57):
You know, some people, if you aredeveloping your own products is
probably doesn't happen as much.
But especially if you're somebody who buysin product from other people, then you may
well find this, that you are being steeredor pushed around by the product suppliers,
and it depends on your sector, but someof them are more predatory than others.
And in fact, one story that somebodytold me that really I mean, I think
(14:19):
summed this whole thing up, was that Idid some work with a fashion boutique.
They were part of myRetail By Design program.
We did a lot of work on how muchstock they actually should have in the
business, when it should be coming in.
We worked on their stockplan, put it all together.
And then they had a series of buyingappointments and they went into the
(14:41):
showroom and they started talkingto one of the suppliers and they
said, right, this is our budget.
This is how much we'd like to spend.
And the supply basically laughedand said, oh, you small businesses,
you never really have budgets.
So basically almost like admitting thatthe way that they sold was to disregard
how much the small business actuallyshould have or needed to have, but
(15:02):
basically was like, oh, I know that ifI just wave enough amazing product under
your nose, you'll end up buying it.
So that's something that happensif you don't have a system.
You can end up gettingswayed by pushy salespeople.
As I said, less of an issueperhaps if you are somebody who is
manufacturing your own products.
Although sometimes manufacturerscan be pushy too, so it's something
(15:23):
that leaves you vulnerable if youdon't have a plan and don't have
a really clear way of saying,actually, I need to have this budget.
This is what I'm going to spend.
And because you are not ahundred percent dead certain.
That's how much you should have.
Then you can end up beingswayed by other people.
So that is the issue.
If you don't have a simple system tokeep you on track, you can end up in
(15:47):
either this analysis paralysis whereyou're not really sure what to buy, or
you end up being too swayed by otherpeople, or you end up just making
decisions based on not exactly a whim.
But like a kind of a gut feel or I thinkthis is probably what I want, or you can
end up feeling really scatter gun, or I'mgonna try this and I'm gonna try that.
And it doesn't feel in control.
(16:09):
It feels very governed by howmuch money you've currently got.
And it's not related to things like whatyour sales are going to be in the future.
And it just feels a lot moread hoc and a lot more winging
it, for want of a better word.
So what are the issueswith this in the business?
Well, apart from the stress level,because to be honest, this is one of
(16:29):
the things that causes a lot of stressfor people, especially as they grow.
Founders who are growing, who don't havea really strong control over their stock
often find it super stressful becausethey have to make bigger decisions.
The numbers go up, the amountthat their spending goes up.
And when they were spending a smallamount of money, they could justify
(16:52):
it say, well, I'll try this and if itdoesn't work, I can get figure it out.
But then as the numbersgo up, it gets more scary.
So there's the impact, there'sthe mental impact on the founders,
which is not insignificant.
It's something that I see a lot anda lot of the time when I'm talking to
people on sales calls to talk aboutRetail by Design or Stock Doctor, my
done for you stock management service.
(17:12):
I can see the stress that they're under.
I can see how it's waking them upin the middle of the night and it's
just generally not a nice feeling.
I believe there's a big financial costas well, and making mistakes with what
you're purchasing because you purchasedwithout a real clear, strong strategy.
That is probably one of the mostexpensive mistakes that I see
(17:32):
people make on an ongoing basis.
They have stock that issitting in the wrong place.
Now, it's worth reiterating thatany retail business that you look
at is going to have fast movingstock and slow moving stock.
So every single business that I'veever worked in, if you looked at the
80-20 rule where you say 80% of yoursales will be coming from just 20%
of your stock (17:57):
this always happens.
This happens whether the businessis a $2 billion turnover business
or whether it is a businessturning over 30,000 pounds a year.
There will be a disproportionate amountof sales coming from a few products.
Or if you buy one-offs, lots of vintage,you will get a disproportionate amount
(18:18):
of sales coming from a few product types.
This always happens.
You cannot really have a businesswhere all of the stock sells equally.
I'm yet to see anythingthat even comes close.
There's always some real outperformers.
But then the difference is, so it's notabout saying, oh, well, unless I can
(18:39):
get all the stock to sell equally, thenI must be doing something really bad.
The name of the game is, how do youdrop your stock levels to the point at
which you are not losing sales, but youalso don't have too much money tied up
in dead stock, and that is the thing.
So that is probably the biggestfinancial cost of not having a
(19:00):
plan, not having a clear idea, isyou have too much stock or you have
too much stock in the wrong place.
Loss sales is the other piecethat is really damaging.
If you have got your best sellers,but you're not backing them in enough
depth because you don't have a reallyclear plan and have it all mapped out.
Lost sales is really,really tricky as well.
And that confidence cost.
(19:21):
As I said, anytime you make anerror or you feel like you've got
too much stock tied up, then it canchip away at your trust in yourself.
And then it also just bleeds.
The stress can bleed into a lot ofdifferent areas of the business,
especially if it's having an impacton your cash flow, and it just starts
to all feel a bit more difficult.
The difference being when I workwith people on their stock, then
(19:44):
they feel generally much calmer.
They feel more in controland they feel confident.
So sometimes for the first time, theyfeel like they can make decisions in the
business and be really able to see theimpact of them, which to me is hugely
empowering and you know, really, reallyrewarding When I see people go from
feeling completely out of control becauseof these large amounts of money going
(20:08):
out of their bank account at differenttimes to feeling really considered with
what they're doing with their purchasing,and really strong and confident.
So what do you actually need?
Really what you need is somethingsimple to help you understand where
(20:29):
you need to be spending your money andhow much money you need to be spending.
So I always say that You stock planshould start with your sales plan.
So the first thing you really needto understand is, okay, what am I
actually aiming for in terms of sales?
And then once you have that, youcan build up what your stock plan
should be, and then you are able tocreate yourself a budget for stock.
(20:51):
Having a budget for stock is a gamechanger because it gives you a finite
amount of money that you are reallyprepared to spend on a particular
month on your stock as opposed tofeeling like it's this endless pile.
And it also hopefully puts you reallyclearly gets it really clear in your
head that it's not just about havingas much stock as possible, it's about
having the right stock in the rightplace at the right time, which is one of
(21:14):
those merchandising mantras that you arebasically taught on day one of the job.
Right stock, right place, right time.
So you need to have a framework,and I'm a big believer in putting
together a simple framework thatis not difficult to understand.
That is something thatis easy to maintain.
(21:37):
That is essentially, the kind of, thelong and the short of it is you need
to have a budget for your stock eachmonth and you need to have an idea of
where you should be focusing that money.
Switch from thinking that it's an infiniteamount, or you can spend as much money as
you've got in your bank account saying,no, this is how much money I should have.
(21:57):
And therefore, I'm going tobe really directional and this
is where I'm going to spend it.
And making those two tweaks can helpyou go from feeling completely
out of control, to feeling muchmore in control and focused.
You don't want something thatis going to take you hours
and hours and hours to update.
(22:18):
You want something at the veryleast top level you want something
that you can manage yourself.
And so, it takes away the guesswork andit just helps you look at your stock in
a different way and helps you get reallyclear on, as I said, what you should be
spending, how much you should be spending,and what you should be spending it on.
(22:40):
So giving product business owners thatcontrol, helping them feel confident, as
I said, it's absolutely what I love to do.
It is what motivates me, and I really dotruly believe that anybody, even if they
don't consider themselves to be a numbersperson, can get themselves to a point
where they feel much more in control abouttheir stock, that they feel much clearer
about where they want to go, and theycan have that confidence back in terms
(23:06):
of I'm spending the right amount of moneyand I'm spending it on the right things.
It's just about a shift in perspectivemore than it's about complicated sums.
So if you've enjoyed today'sepisode and you'd like to know more
about managing your stock, I amgoing to be running a free talk.
This is happening on Monday, the 16th ofJune at 10:00 AM and the title of the talk
(23:29):
is Stop Letting Stock Eat Your Profit.
We're going to break down what'sbeen going wrong with your stock and
show you how to start fixing it, andit's totally free and I promise it
is going to be well worth your time.
No jargon, no shame, just an ideaof how you can make three quick
fixes to help start improving yourstock management in that week.
(23:51):
Because I know how busy you are.
I know you don't have the time forthis, so I wanted to show quickly how
you can get a handle on your stockand start making better decisions.
So in summary then, it's not about you.
It's about having a system,but that's the good news.
You can have a system.
It doesn't have to be super complicated.
You can start making a differenceand start feeling more in control
(24:13):
of your stock, and I'd love to help.
So check out the show notes where youcan find out more details about the talk.
And then if you have a moment torate and review the podcast, it
makes a huge difference to gettingit out there in front of more people.
And of course, if you like, followand subscribe, you'll be the first
to know about each new episode, whichcomes out every Thursday morning.
See you next week.
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