Most product-based business owners think they need something new to grow, a new strategy, a shiny tool, a game-changing idea. But the truth, you don't need more exciting. You need what actually works. Because the businesses that win on profit and cash flow, yeah, they've mastered the fundamentals. And this is exactly what we do inside the Inventory Genius program. We clean up your financials so that you have a clear, accurate picture of your inventory and your real margins. We fix your product mix, making sure every single SKU is actually making you money, not just creating revenue. And we build a profit plan so that you can pay off debt, generate cash, and run your business with confidence. No fluff, no guesswork, no chasing trends, just a proven system that helps product-based businesses win again when it comes to profit and it comes to cash. Because long-term success isn't flashy, it's consistent. Join us in the Inventory Genius program. Let's make your business work for you. Hey friend, welcome to the Inventory Genius podcast, where we work together here to make you an inventory genius. We talk about profit, we talk about cash flow, and we definitely talk about your paycheck. Because at the end of the day, it's all related to your inventory. Let's go. Hey there, welcome to the Inventory Genius Podcast. I'm your host, Sierra. Most product-based business owners can tell you exactly where they get their inventory or how their product is made, but they can't tell you if it's actually a profitable product. If you've ever had a great sales month and you still feel broke, or you're just not sure if raising your prices would help you or what the missing pieces actually are, this episode is your wake up call. Today we're talking about one of the most unsexy and absolutely non-negotiable habits of a sustainable product business, knowing your numbers. Now we hear this all the time. Know your numbers, know your numbers. But what does that actually mean? So I want you to think about this. You can't scale and grow what you cannot see. Revenue going up does not mean profit is going up. In fact, I just hosted the debt detox boot camp. And one of the phrases that I said just in passing in conversation resonated so much with those that were listening that they kept bringing it up through the rest of the boot camp. Revenue does not mean profit. Revenue does not equal profit. Revenue and profit are not the same thing. Product businesses can literally grow themselves out of business because their cost of goods is too high, they're buying too much inventory, or they're fulfilling and the costs are so crazy for that fulfillment and they don't even realize it. They can sell themselves right out of business. Feelings are not a financial strategy. So I feel like we're doing okay is not an answer. Founders who get who have a gut check without data start to make reactive decisions. So when you have a gut like, I feel like I should, but you don't have data, you're gonna make reactive decisions. They're gonna discount. You're gonna discount when you shouldn't. You're gonna overstock what actually didn't move. You're gonna undercharge for what you should be charging more for. Your numbers tell you where your actual problems are. Is this a revenue issue? Is this a margin issue, an average order value issue, a retention issue? Each has a complexity different and in and of itself, but you can't find the right fix without having the right data. So I want you to think about this: a product business that seemed fine until reviewing numbers noticed that one bestseller was actually barely breaking even after shipping and packaging costs. Does that sound familiar? Numbers give you confidence. And when you know them, you stop second guessing every price, every ad spent, every wholesale inquiry, every hire you make. You now have a framework for saying yes or saying no. And that's what it means to know your numbers and air quotes here, to know your numbers. It means that you're basing your decisions off of fact, not emotion and gut. All right, I want you to think about what knowing your numbers actually looks like. So I've broken numbers down into four buckets for you. If you have a pen and paper, write these down. If not, you can go back and listen to this later. But there's four main buckets of numbers in a product-based business. So the first bucket is your revenue and sales bucket. This is going to include numbers like your total sales, your total sales by revenue stream. So, in other words, do you sell retail, wholesale? You know, are you on e-commer, brick and mortar? What are your revenue streams and what is the revenue per revenue stream? In this bucket would also be things like average order value, units per transaction. These all tell you how the business is growing and where the sales are coming from. Make a note of that. Okay. So bucket number one, revenue and sales metrics. These are things that are revenue, revenue by revenue stream, average order value, units per transaction. And all of these numbers tell you how the business is growing and where's our where sales are actually coming from. Now, I will say that a lot of product-based business owners, if they focus on any numbers at all, this is where they focus. So this is where they they spend their time looking at numbers. How are my sales this year over last year? How are my sales in this department over that department? How are my sales in this brand over that brand? And this is all very, very important. In fact, when I work with clients in the Inventory Genius operating system program, we focus on this. Like this is not something that we ignore. However, you can't stop here. Knowing your numbers doesn't stop with the revenue and sales metrics bucket because there's three more buckets of numbers in a product-based business. So bucket number two, these are your profitability metrics. Okay. So bucket number one, revenue and sales metrics, prof uh bucket number two, profitability metrics. Okay. So this is gonna be things like gross margin per product, revenue after cost of goods. So what is your gross margin? So you take your sales minus your cost of goods. What is that revenue or that gross margin after cost of goods is re you know subtracted? This is gonna be things like materials, packaging, labor, and do those things go into those numbers go into our cost of goods sold? Overall gross margin. This is actually, in my opinion, the most overlooked and ignored number in a product-based business. And it makes me so sad, you guys, because your gross margin is your secret weapon. That is why in the IGUS program, when you are in and locked in and you are starting to implement, the first thing we look at is gross margin. It is so underutilized in product-based business, and it is your secret weapon. It is your magic wand. It is, it is the backbone of your business, gross margin. This is one of our profitability metrics. Another profitability metric would be your net profit. So your net profit is what happens after your sales minus your cost of goods minus the operating expense. So, what is the net profit or net loss? This is another profitability metric. So think about this. I make $10,000 in revenue. That doesn't mean anything if you don't know your gross margin or your net profit, right? So we can have information and knowledge about our revenue and sales metrics bucket, but if we're not combining that with our profitability metrics and looking at that in light of our profitability metrics, the sales and revenue metrics really have no meaning. They're they're just vanity metrics at the end of the day. So we have four buckets of numbers in our business, and they're all important sales and revenue, profitability. Let's focus on bucket number three, inventory and cash flow. So the metrics or the numbers that would be in this bucket would be the value of your inventory on hand, what's moving versus what's sitting. So I work a lot with clients in the IGUS program on inventory turn. This is a huge underutilized metric as well. So while gross margin is like that's what we have to focus on first. When the time is appropriate in IGUS, we really start to lean into turn as well because turn can tell you so much about that revenue. Yes, I have a ton of revenue, but could I have more? Could my margin be greater? Like what's happening with the turn of my inventory? So inventory and cash flow bucket, we have inventory value on hand. We have what's moving or what's sitting, that's your turn. We have cash in versus cash out. You can see this on a cash flow statement. Um, all of this is super important in those inventory and cash flow metrics. I like to also look at, you know, some of our um average order value um metrics, if we look at them in light of inventory, that's important. I like to look at um in this inventory and cash flow bucket, the proportions of the inventory as it's divided in our business. So how many tops do we have? How many bottoms do we have? How is that proportionate or disproportionate to sales, inventory turn, and you know, gross margin. These these metrics, these numbers in the inventory and cash flow bucket are really important as well. And then our fourth bucket, and this one can be kind of fun. This is our customer metrics bucket. So in this bucket of numbers, we have new customers versus returning customers. You might be looking at things like email list size and the growth rate. You might be looking at conversion rates in your stores. So people that walk into those that actually purchase or conversion rates on your website. These customer metrics help you predict the future revenue. Okay. So this is why this bucket's really important. When you get to know your customer metrics numbers, you can start to predict future revenue. So you can see trends. And we're not just saying we did $100,000 this month. So therefore, add 10% next year at this time, we're going to do 110,000. No, we're looking at the customer metrics and saying, based off of our trends of returning customers versus new customers, conversion rates, et cetera, we have actual data. And can you guys see how exciting this is? When you look at your numbers in this way, when you think of them in buttons, buckets, revenue and sales numbers, profitability numbers, inventory and cash flow numbers, and customer metrics numbers, when we look at them all and we start to get familiar with all of them, not just our revenue, but with all of them, we can see how they all interplay. And now we have so much more power in our business to predict the future, to make changes, to get really smart with our cash at the end of the day. You don't have to have a finance degree. You simply need some sort of dashboard that you've built out before you can make any major decisions. So I'm just gonna put a plug here. I have to, but IGOS, that is the dashboard. So if you're looking at, okay, so now I know I need to know all of these numbers. How do I look at them consistently? How and when do I look at them? How do I put them together to form a beautiful picture from the puzzle pieces? That is exactly what IGOS is, the inventory genius operating system. It's an operating system that takes all of these numbers for a product-based business and it starts to really finally make them make sense. So there's your plug. Okay, let's move on. All right. So let's talk about a rhythm for reviewing these numbers because I would say that different numbers need a different review process. Okay. Um, in Inventory Genius, we talk about money Mondays. So I just have clients in the IGUS program get into a financial hygiene rhythm of reviewing their numbers on Monday. There's very specific numbers that they review on Monday, and then there's tasks that they do. It takes about 10 to 15 minutes every Monday. It's very quick, easy, and it gives you so much power and decision making as you head into the week. But you can pick a different day. Like I have one, actually one client right now. She's working with me in the C-suite program. So we're working together one-on-one every week. And she said, Sierra, honestly, Mondays just don't work for me because Monday is my day off. And so if I pull out my laptop and I do my money Mondays and look at my numbers on Monday, all of a sudden I'm sucked into emails and texts, and now I'm working on my day off. And I said, you know what? Here's the thing. Whether it's IGOS or anything else, um, you know, that I teach, it has to also work for you. And so this is just a caveat here for you guys. It has to work for you in your business or you're not going to use it. And so I said, okay, it's not that Mondays are sacred and it's the only way it's ever gonna work for you to look at numbers is if you look at Mondays. It's just that typically Mondays are a great day for product-based business owners. And I'm trying to encourage you to get into a financial routine. But if we need to choose a different day and we still have the same method of looking at the right numbers in the right order, let's choose a different day. And so she's doing on Tuesday. She's like, Tuesday's my first day in the office. And so she set aside an hour for herself every Tuesday, 15 minutes of it. She goes through her money Monday routine on Tuesday. And then the other 45 minutes, she does some research on her brand. She does some inventory things, some of her own business um tasks that she wants to get done that are financially related. So, you guys, it's all about like what rhythm works for you. And then within that rhythm, is it a weekly task or is it a monthly task? So I have a couple checklists here for you guys. Now, I usually don't ever, you know, recommend or tell you to take notes during a podcast, and you might not be able to take notes during today's podcast. But if you like these checklists, I'd encourage you when you have a moment, go back and listen to this again and write these things down because this I feel like will be very helpful for you. So while I divided those knowing your numbers numbers into those four buckets: revenue and sales metrics, bucket number one, profitability metrics, bucket number two, inventory and cash flow metrics, bucket number three, and customer metrics, bucket number four. Now I'm gonna tell you how I teach and suggest you review these different numbers and when. Okay, so here's your weekly check-in. Okay, this is the checklist for if you're doing this, what you would be looking at weekly. Total revenue this week versus last, units sold by product category or brand, depending on what you're focusing on. I absolutely want you looking at average order value every single week. I want you to be looking at new email subscribers or customer acquisition numbers every single week. So how many people walked in the brick and mortar store, how many email subscribers did we get depending on your business model? I want you to look at your cash balance in your inventory checking account. So in the IGOS program, we have you work on building out an inventory account that you use specifically to purchase inventory so you become self-reliant in financing your inventory, which allows you to get free of debt. Okay. So if you have that inventory account built up and you're utilizing it, I want you to be looking at the balance in it every single week. I want you to look at any outstanding invoices or bills that you might have due if you're on terms. I want you to look at your top selling product. And then if you're running ads, I want you to look at your ad spend versus revenue from ads. So this is your weekly checklist, your revenue this week versus last, units sold by product or brand, however you're tracking it, your conversions, whether that's e-comm or brick and mortar, what's your conversion rate? New customer acquisition, balance in your inventory account, outstanding invoices or bills, your top selling products, and then any ad spend versus revenue. That's your weekly checklist. Okay. Now here's your monthly checklist. This is what I want you doing every single month. I want you to look at total revenue versus the prior month and the same month last year. Okay. So what was my revenue versus the month before versus the same month last year? I want you to look at your revenue by revenue stream. So if you have a website, if you have a brick and mortar, if you have multiple brick and mortars, if you have an e-com, all of the revenue coming in, I want you to look at how much revenue is coming in by revenue stream. You guys, this is huge. Gross margin by your top five products or brands. You, because gross margin is our secret weapon, you have to be ruthless about tracking and measuring and observing it. Okay. Total cost of goods for the month. So what did your cost of goods end up being? I want you to be looking at your financials monthly. So your profit and loss in your balance sheet. New customers versus returning customers. Let's look at these ratios. How do we do this this month? And then I want you to look at your total marketing spend versus revenue generated. So while we keep track of this weekly, I also want you to look at it monthly. Okay. Here's the thing. If you don't know your numbers yet, it's totally fine. I always like to say today's a new day with no mistakes in it. Tomorrow's a new day with no mistakes in it. Every day we have the opportunity to learn something new, to refine how we think and behave, to become a better version of ourself, to improve our business, to become a better leader. Every day we have that opportunity. And so if you don't know your numbers yet, or you've never looked at any of these numbers, you've never thought of them in revenue buckets, like if this is all new to you, or on the flip side, maybe you've heard this, maybe you've been listening to me. Um I see you out there, you've been listening to me for years and just not taking the action that you need to take. It doesn't matter. Today's a new day. It's a fresh day. You get to start. So the most successful product-based businesses are not the ones with the best products or the most revenue. They are the ones with the best understanding of their business model. They know their numbers. Your numbers is the way that you build that business with a strong foundation. Your numbers are not just a report card, they are the roadmap to what is happening in your business. And this is why I want you to make knowing your numbers a top priority in 2026. All right. Thank you so much for joining me today. We'll see you all next week. Bye for now. Hey, do your brand, your website, and your email marketing feel like three different things you're working on, none of which go together or create strategic growth. Then I would like to introduce you to my friend Cassidy at SimplyLens Creative. Cassidy helps product-based businesses bring all three of these things together, their brand, their website, and their email marketing, into one strategic growth tool for their product-based business. And here's what I appreciate about Cassidy. She comes from a retail family. In fact, her family still owns a brick and mortar retail store. So she genuinely gets the product-based world. Visit simply lenscreative.com and book a free strategy call with Cassidy. Chat with her about your brand, your website, and your email marketing, and see how she can maybe pull these things together for you so that you have one strategic growth tool for your business. SimplyLinsCreative.com, give Cassidy a call.