Today’s post will be the third month in an ongoing series of guest financial results posts. If you missed the first ones, you can find them here HERE.
Take it away Dana:
Wow – it’s hard to believe it’s July already – and I’ve been full-time at this crazy Amazon thing for 3 months now. Honestly – it seems much longer – lol!
They say everyone hits a bump sooner or later – and I hit mine hard this last month. June was not a good month – but that’s ok. It was planned and expected. Now it’s behind us and we can focus on the months ahead. I think there are some very valuable tidbits that came from June.
June 2016 Financial Results
To recap June’s goals:
My goals for June:
– $4000 Gross Sales
– Make first wholesale test buy
– Start streamlining more of my processes in preparation for outsourcing some additional activities (buying, reporting, accounting, etc)
Goal 1 – Gross Sales of $4000
I knew going into June that our sales would decrease because we had just moved across the country and much of May was spent packing and getting ready instead of buying inventory and working on our business. So we adjusted our sales goals down. Some might look at this and say – well you still exceeded you’re goal – so that’s good. But let’s look a little more into what it took to get to that Gross Sales Number.
Here’s a snapshot of sales for the month (click to enlarge, same goes for all other images in the post):
Cash flow is king in this business and I definitely needed to make some sales in June to recoup some money so I could continue to buy new inventory. Given that much of the inventory we already had was slow moving (or it would have already been gone) – we had a sale. I dropped the prices on many of the slow moving items – those things that had been there for 2-3 months already (a few longer), and on the things that the price had dropped since we ordered them. Sure – I might could have squeezed a few more dollars out of some of the items had I waited – but I also needed money to continue to purchase inventory for the next month. So we dropped our prices in order to recoup some money. So YEAH – we sold stuff and we exceeded our goal for July – but our margins were cut dramatically and at the end of the day so was profit:
As you can see here – despite our gross sales of over $5000 – we actually profited very little. Our net profit was almost the same as Feb – yet our gross sales were nearly 3.5 times those in Feb. We actually grossed more than March but MADE less. This my friends is the importance of knowing ALL your numbers and not just fixating on Gross Sales.
First, the small profit number was not a surprise – nor should it ever be. Why? Because you should be managing your business day-to-day, knowing what you’re buying stuff at, knowing what you’re pricing stuff at, and knowing what you’re selling stuff at. In this case – I knew this number was going to be small. I made a conscious decision the day we returned from vacation that we’d drop our prices in order to recoup some of our money so we could reinvest. I knew I was pricing some items at a slight loss. I knew I was pricing some items below my standard ROI. But I needed cash coming in to prepare for the next month.
Here is the Year-to-Date summary. Hey – look at that! $448.30 in Reimbursements!! I spent a day going through Ryan’s book, The Complete Guide to Reimbursements, and implemented every one of his suggestions and got some money back. It was probably my most profitable day – lol!
Again – you can really see the true story by looking at that Net Profit line – 4% – ouch! But that’s ok – we have a plan.
I need to admit something – I closed my books for June last week and was so depressed I couldn’t bring myself to sit down and write a post about the results. I finally sat down today and started putting it all together. I was trying to figure out how I was going to tell the world I just lost a crap load of money on Amazon. Yeah – I’m moving homes – yeah I went on vacation for a week – blah blah….but I was just dreading doing this post. I knew June was going to be bad – but I couldn’t put my head around that much of a loss – like nearly $1500 in the red! But after writing the whole thing and getting down to posting my expenses I noticed something weird – my FBA expenses were double what they typically are yet my sales went down. I hadn’t noticed that last week when I was doing all my charts, etc. Low and behold – I had added an extra subtotal and was counting my FBA fees twice! Took that subtotal out and like magic – we’re back in the black baby!
It might be time for a ‘real’ accountant – lol
Goal 2 – Make Wholesale test buy
So I didn’t do this. No real excuse why – I just didn’t. I did however make progress toward the goal. I went through 1 of my 2 wholesale accounts and made a buy list. These are my first wholesale accounts and there aren’t many items that offer a profit – but I’ve been able to find a few and will be making a buy soon. My problem right now is timing on being able to receive the products in. We’ve sold our house in Arkansas and have had to come back for 3 weeks to sell the remaining furniture and close. I’m not sure I’d receive the order before I leave Arkansas – nor would I have a place to prep/ship it to FBA or room to take it back to Colorado with me. I’d prefer not to send them to my prep center the first time around. I’d like to get a better idea of what the products look like and how I want to prep them before I turn that over. So it might be August before I can make this first buy. But I have a list – and I know what I want to purchase. I’ve also done a lot of research on some niche markets and started a list of potential wholesalers for those. I’m really hoping that once we’re past all the moving stuff I’ll be ready to hit the road running.
Goal 3 – Streamlining processes
This is a biggy for me. I sort of love documenting processes, doing flow charts and process improvements in general. I actually won a course that outlines how to build a FBA team. I’ve completed the course and I’ve started documenting my processes. I’ve outlined what help I’d like to start with – which will probably be a VA to help with bookkeeping and submitting for reimbursements. I’ve outlined my daily, bi-weekly, monthly and quarterly processes. I plan to finalize all those in July and then start streamlining them and hopefully hiring some help – if I can afford it.
I’ve been able to clarify my long-term goals a bit better and I know I can’t get to where I want to be alone. Striking that balance between not being able to grow without help and being able to afford the help is hard. Especially after a month like this. But we’ll get there. Slow and Steady.
And obviously on the list is getting – a real Accountant – 🙂
Looking toward July
So things should start looking up in July. I don’t think I’ll see a dramatic uptick – as I still have lots of non-business related stuff around selling our house that will take more time than I’d like. But I’ve already started to make some changes. Because I need to build my inventory back up – I’ve subscribed to 1 list to help in sourcing. Generally I don’t do lists – because honestly my husband was sourcing as good or better than many of the list I had tried. But he’s been slacking on the sourcing a bit and I need to get some wins. I’ve created a daily spend goal and I’ve joined a spending challenge again to help me stay on track. I’m making buys every day. And while I’m in Arkansas – I plan to do at least 1 RA trip a week (maybe two). It’s very hard to do RA while in Colorado because I’m 3 hrs away from any metro area and it requires an overnight hotel stay. And until now – I’ve had no place to prep/ship stuff from because we still have moving boxes in the garage. August that should be taken care of and I’ll officially have my office ready to go in Colorado.
So our goals for July:
– Gross sales $6000 with a target gross profit margin of 40%
– Meet goals in Spending Challenge ($8000 spend at least 50% ROI & $400 Cash Back)
– Refine daily, monthly processes and document my plan for building a team
– Complete Inventory Sourcing Course (this is a course I purchased that I still need to complete)
– Close on our house, move everything else out and drive back to Colorado.
Something I learned that I’ve already made a note to be better prepared for next year is Prime Day. To be honest – I didn’t really know what that was and once I found out the date – I wasn’t really prepared. I just don’t have the quantity or quality of inventory that I need to have. So I’ve made a note for next year in advance of when it normally is – so I can be better prepared. Actually I’ve created a Promo Calendar for the entire year so I can better focus each month on upcoming promotions that need to happen. If you haven’t looked ahead to what is coming down the pipe in terms of promotions (both via Amazon and/or your wholesaler) – now is probably a good time.
July sourcing will be spent focusing on some back to school items and starting to look ahead for Q4. I’ve not been through a Q4 yet – so I’m a bit nervous. But I think having my processes down will help. My goal is to be able to hire a couple of folks to help me source and ship during that time. I have some options for cash that I’ll be revisiting and making a decision on in the coming months as well.
See you next month!!
Ryan’s last words: Thank you Dana for putting this post together and sharing all of these details!