Christyne Gray is a distinguished accountant, inventory planning expert, cash flow efficiency coach, certified tax specialist, and the visionary founder of She Profits Now. With a career spanning over 25 years, she has been a serial entrepreneur focusing on the retail industry since her college days. She has dedicated her career to helping high-achieving retail industry entrepreneurs create profitable and impactful businesses through her Financially Fabulous Coaching Program and her extensive experience in financial directorship and leadership.

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> Here’s a glimpse of what you would learn….

In this episode of the Ecomm Breakthrough Podcast, host Josh Hadley interviews Christyne Gray, founder of She Profits Now, to discuss an “infinite financial loop” designed to boost e-commerce profitability. Christyne shares her expertise in accounting, inventory planning, and cash flow efficiency, emphasizing the importance of a profitability-focused mindset. Key takeaways include the 40-20-40 cash flow management rule, strategic inventory control, and the necessity of regular financial assessments. By following Christine’s actionable steps, entrepreneurs can better manage their financials, optimize spending, and drive their businesses toward sustainable growth and higher profitability.

Here are the 3 action items that Josh identified from this episode:

Special Mention(s):

Related Episode(s):

Sponsor for this episode…

This episode is brought to you by eComm Breakthrough Consulting where I help seven-figure e-commerce owners grow to eight figures.

I started Hadley Designs in 2015 and grew it to an eight-figure brand in seven years.

I made mistakes along the way that made the path to eight figures longer. At times I doubted whether our business could even survive and become a real brand. I wish I would have had a guide to help me grow faster and avoid the stumbling blocks.

If you’ve hit a plateau and want to know the next steps to take your business to the next level, then go to www.EcommBreakthrough.com (that’s Ecomm with two M’s) to learn more.

Josh Hadley 00:00:00  Welcome to the Ecomm Breakthrough podcast. I’m your host, Josh Hadley, where I interview the top business leaders in e-commerce. Past guests include Kevin King, Aaron Cordova’s and Michael E Gerber, author of the E-myth. Today I am speaking with Christyne Gray. She is the founder of She Profits Now and today we are going to be talking about an infinite financial loop to make your business more profitable. This episode is brought to you by Ecomm Breakthrough, where I specialize in investing in and scaling seven figure e-commerce companies to eight figures and beyond. If you’re an ambitious e-commerce entrepreneur looking for a partner who can help take your business to the next level, my team and I bring hands on experience, strategic insights, and the resources needed to fuel your growth. So if you or someone you know is ready to scale or looking for an investment partner, reach out to me directly at Josh at Ecomm Breakthrough dot com. That’s e-comm with two M’s. And then let’s turn your dreams into reality. Today I am super excited to introduce you all to Christine Gray.

Josh Hadley 00:00:47  Christyne is a distinguished accountant, inventory planning expert, cashflow efficiency coach, certified tax specialist and the visionary founder of She Profits. Now, with a career spanning over 25 years, she has been a serial entrepreneur focusing on the retail industry since her college days. She has dedicated her career to helping high achieving retail industry entrepreneurs create profitable and impactful businesses through her Financially Fabulous coaching program and her extensive experience in the financial directorship and leadership. With that introduction, welcome to the show, Christyne.

Christyne Gray 00:01:16  Thank you. Josh, I’m happy to be here.

Josh Hadley 00:01:18  I’m super excited to have you on because my background, my undergrad in school was finance, so I enjoy looking over a good financial statement, making sure things are lining up properly. And to be honest with you, I think this is probably the area where a lot of entrepreneurs are. Probably the weakest is they don’t want to deal with the accounting side of the business. They just want to know that there’s a lot of money coming into their bank account, and that they can go do fun things with.

Josh Hadley 00:01:41  but I’m curious to hear how you got into this. You know, how you decided to dive into the retail industry and become an expert in all things financial statements and accounting to the retail industry?

Christyne Gray 00:01:50  Well, my entry into retail was very organic in that my family is and has always been in the retail industry, but I personally did not work closely in retail. Growing up, I went to college, got my accounting degree, knew that I wanted to be impactful and not just be an ownership of a general accounting firm. So when I was fresh out of college, I did create my first business, founded my first business, and started into several different industries as an accountant and grew into advisory, made the decision very quickly that retail, the retail sector was the most interesting for me. that I just it gave me just energy. Right. Like when you just all of a sudden you go, okay, I connect with these people and I have energy. So I’m a self learner. So I really deep dove into all the sales inventory and retail metrics.

Christyne Gray 00:02:31  Just self learned all things retail. Had the opportunity to work pretty fairly broadly from a regional aspect, because those were the days where we weren’t really able to work nationwide. We’ve been offered so many more freedoms with our technologies, but regionally became very significant in the retail industry and was able to work boots on the ground with my retail clients, where then I was learning the operational aspects, the creative aspects, everything that you would maybe learn more from an entrepreneurial being, the retail business owner versus the accounting and financial director. And my passion just continue to grow and grow. And as with that, also grew the advisory and the coaching and just the being able to offer empowerment for finance for retailers is and just understanding the creativity mindset that they are. It just drove me, drove me to everything that she profits now is today. Yeah. So it was just the best fit formula. I just knew that it was the area that I wanted to expertise in.

Josh Hadley 00:03:21  That’s a fantastic journey. Yeah. And before we, hit record on this podcast, you and I were talking.

Josh Hadley 00:03:28  And one of the things that we are going to share with the audience is like, as you’ve consulted and coached so many different clients, you have seen a plethora of mistakes that people are making with financials, why they actually end up at the end of the year with a negative profit or zero money in their bank account, even though they have been profitable. So we’re going to be talking about all of those things today. But what you prefaced it with is like, hey, actually like it comes from like the mindset and like understanding this infinite financial loop And you kind of have seven steps that you typically walk your coaching clients through. Maybe that’s where we start. What do you think, Christyne?

Christyne Gray 00:04:01  I love it. That’s a great place to start. It will drive a lot of conversation and realism for your listeners, and hopefully they’ll have a ton of takeaways and maybe some reality moments where they’ll have a reality check of where they are strong and where they can maybe deep dive and learn a little bit more in order to enhance their bottom line and their cash flow in their business, as well as their entrepreneurial professional development.

Josh Hadley 00:04:18  Awesome. All right, Christyne, well, I know you’ve got something to share on your screen. So those of you that are listening, make sure you come check it out on YouTube when the video is posted there so that you can see what Christyne is sharing here on her screen. But Christyne, why don’t you walk us through this infinite financial loop and the seven steps?

Christyne Gray 00:04:33  Okay, yes. So through, like I said, 25 years of being in the retail industry, we outlined that here. It’s I it gave me a great opportunity, the time that I’ve spent with retailers, thousands of retailers not only being their accounting and their tax advisor and their cashflow management strategist and the one to make them through hard, you know, help get them through hard times as well as bring them into lucrative times. It was very quick that I identified that our conversations as client and advisor relationship always stepped into or always leaned into seven areas of focus within the business and through those conversations, was really bringing the entrepreneur.

Christyne Gray 00:05:05  The retail entrepreneur. And your audience is not not just retail, but they’re creatives. They’re creating their product, they’re manufacturing their products. They’re having to learn not only the manufacturing process, but then the retail process. And what do the metrics look behind look like behind those two relationships of coming from creative into manufacturing, into retail, and all of the decisions that are necessary when you start to look at each area of decision making in your business and how you can break that down into very bite sized, actionable decision making areas that maybe don’t seem so, overbearing, right? And draining where we get paralyzed as a creative. Those conversations that I was having was going, okay, we’ve got to simplify this. Let’s put it into a seven step infinite loop. We know that business is always evolving. It’s always changing. And one of the mindsets of the creative entrepreneur is that, okay, as long as I know this area of my business, it’s good to go. It should almost be on autopilot. And I’ve got this area of my business.

Christyne Gray 00:05:53  Good to go. I made these decisions. It’s on autopilot and it’s quite different, right, because of the evolution of each of the businesses. I mean, you’re growing businesses from 7 to 8 figures. There’s a lot happening from a six figure to a seven figure business relative to your financial decisions and the dollars that pass through your business. And then you go from seven figures to eight figures. It’s that much more complex. And the decisions that you’re making and again, I coached you. Every single decision that you make in your business has a dollar sign attached to it. And how do we break it down so that we understand the cause and effect financially of those decisions? And that’s where the seven step infinite loop comes into play okay. So again it makes it more a little bit. It makes it more achievable for us to create focus which then creates action which then creates the results. We can take it one step at a time, but continue to loop around in this financial infinite loop to make sure that we’re not ignoring areas that we maybe made a decision six months ago, but that decision six months need to be revamped, needs to be revamped because the evolution in our business, whether it be what we can control or what we cannot control in our environment, okay.

Christyne Gray 00:06:50  So it allows us to take a step back and always be offering consideration and strategic initiatives towards each area that is affecting our profitability and our cash flow overall. So what you’re seeing in front of you is this infinite loop. So in the center of your infinite right, like infinite is just that looping. And it always goes around in the very center of it. It is your mindset and your habits, and your mindset needs to be a profitability focused mindset. It needs to be a cash flow, efficiency focused mindset as well as you creatives. It has to also be is how far do we extend, how wide and how deep do we go with our creativity? When our creativity is translating into products that people either do or do not desire, and how long do they desire that product? So the mindset has to come into so many different directions, but no matter what, it has to be that money matters. It has to be money focused, profitability focused and cash flow focused, or we fall into critical zone with our business.

Christyne Gray 00:07:40  And can it not only scale but survive, right. So then it comes also down to habit building. So each of the infinite steps that I’ll go through here is how do we solidify a healthy mindset around each step. But how do we also build out good economic habits around each step, so that we are focused on the data and the data driven decision making, and the strategies that we can put into play in our business in order to optimize and become more efficient and effective with those dollars flowing through our business. Okay, so that’s the center of your infinite loop. And the beautiful thing, if you can see this on your screen. And I’ll also make sure that Josh has a screenshot of it that you can look back to it as well, for your show notes. But the beautiful thing about it is that we pass through the mindset phase several times on that infinite loop to really bring ourselves back down to reality and make sure that we don’t get lost in the everyday responsibilities of being an entrepreneur and managing the business and working in the business that we’re actually financially working on the business and adding focus to the financial aspects.

Christyne Gray 00:08:35  Because honestly, we all know, Josh, you’ve run, you’ve ran businesses, you invest in businesses. If the cash flow is aligned with your goals for your business, everything else comes easier. And so why wouldn’t we make that our highest habit forming area that we focus on? Yeah, right.

Josh Hadley 00:08:49  I think that that mindset is extremely important, and I think it makes all the difference. And you and also having a mindset that is focused on doing, you know, proper financial planning and assessment on your business. I like it’s just a necessary evil. Even if you say like, oh, I don’t love it, I don’t love accounting. And I want that off my plate. Like at the core of it a business is there to generate profit. And if you’re not looking at those PNL statements and identifying like where efficiencies are gaps, that’s where your business is, is really going to suffer. So I’m 100% on board with you, and I want to continue down this path so that we can give some more ideas and insights to these entrepreneurs to help them understand, like, here are some of these steps in this financial loop and why they’re so impactful to their business.

Christyne Gray 00:09:33  Right, exactly. And being creative entrepreneurs, which the retail segment and the design, you know, the brand segment, your your customers, your your audience are building a brand. When we’re creative entrepreneurs and we’re focused on our brand and our customer and our customer avatar, it is really easy to give ourselves the excuse that we’re not good at math. We’re numbers dyslexic. My accountant will take care of this, you know. It’s just like by. By the greater powers above us. This will just all work out. We’ve got to get ourselves into that mindset that our creativity can actually shine through in our financial work as well as entrepreneurs. We just have to lean into it and see that it actually can be creative and fun. Which that’s probably why you see my brand. If you guys are looking at like, who is she profits now, who is Christyne? I’m a bright person, and it’s honestly because I’m also a very creative person and I take that. I bring that into my coaching and my consulting.

Christyne Gray 00:10:18  And so even the slides that you’re seeing, very colorful, because I want it to appeal to the creative entrepreneur, because I want to remove the fear of knowing your numbers in the fear of what they’re telling you and remove. I always say you’re not you are not numbers dyslexic. You are not bad at math because guess what? I guarantee you’re looking at your Amazon dashboard all day long and you fully understand what that dashboard is telling you when it comes to your sales and the revenue coming through the door, what you’re ignoring and make an excuse and creating a different narrative than what is healthy is that you can just it’ll all work out and you don’t have to look at once the numbers come into the business, what happens with them afterwards? And that’s what this loop is all about. Okay. So the numbers that have already come into the business, how are we efficiently and effectively managing them, making decisions around them, like you said, and really being intentional? And what’s our purpose towards our profitability? Yeah.

Christyne Gray 00:11:02  So when you look at the loop, the very first step of your loop, you come out of your mindset and your habit building and you’re immediately coming into your look back. So your look back in your business is looking back at your sales metrics. How are you accomplishing your sales? What is your average order value? Who are your new? What are your your new customers, and what percentage of your sales is your new customers? And then who is your returning customers? What percentage of sales is your returning customers? And we’re going to break this down into several different areas. Those would be the three areas of your sales metrics that we want you to be in focus on. When you’re looking back, your average order value, just tweaking it a little bit can from a seven to an eight figure business can mean a huge difference, right? Like a $10 more average order value on a seven figure business. Imagine what that would bring in if you’re just focused on average order value. How do we raise it up? Does it mean that we’re bundling? Does it mean that we have, you know, a follow up where we get an additional on Amazon? You know, it might be a little bit different, but if you have multiple sales channels, how do you tap into the opportunity to raise your average order value.

Christyne Gray 00:11:57  And then that new customer rate and the returning customer rate and how often you’re returning customers are recurring, meaning me as a returning customer, how often am I coming back? I’m not just a returning customer once or twice, but in any given month or quarter or season, how many times are you bringing me back into your sales funnel and knowing and understanding your new customer rates in a percentage standpoint, to sales and your returning customers? What does that mean for your longevity of your business? Because when I’m coaching, if I look at a business that has an 80% returning customer rate and a 20% new customer rate, that would seem on the surface as a really good metric, right? Like, hey, we’ve got 80% returning customers if you are subscription based, maybe. But all of a sudden you start to have where you have not been managing your inventory. And we’ll talk about that from a lookback standpoint, or you’ve been ordering and reordering the same designs and keep pushing out. You don’t have or you’re going to you’re going too deep on any given design and not wide enough in your SKUs, you could actually be hindering your ability at some point to repeat your recurring customers and your returning customers at 80%.

Christyne Gray 00:12:54  Any massive drop could truly be the lifespan of your business. So we want to find the balance between what is new customers, what’s returning customers, what are those percentages and how do they balance out, and what is our marketing plan based on that balance? Right. And I won’t go into marketing, obviously, but those new customer and returning customer rates and relative to the average order value, how much is each of them? Spending makes a huge impact when you’re looking back to say, how is it that I’ve accomplished that seven figure sales metric, and how close and how am I scaling towards the eight figure? Knowing understanding gives you the opportunity to pull different levers, and I like the idea of we always to just add preface to this, and we’ll go maybe a little bit more conversation. That’s the sales metrics he is. I’m always coaching to the gap. So I always say you look back, you identify what’s working, where’s your wins? Where’s your how do you repeat your wins? How do you identify areas of opportunity where I just said 80% returning customers seems good, but it actually could be critical.

Christyne Gray 00:13:46  You need to then shift and focus on new customers, or add some retargeting, or change some of your retargeting on returning customers into new customers. To change that percentage a little bit, get a more balanced mix into who you’re bringing through your doors. From a sales receipt standpoint, it gives you the opportunity to look back, identify opportunities. You look back, you identify opportunity. But then where do you have gaps? How can you improve? How can you create more efficiency out of your selling and who you are getting a sales receipt from? And what does that look like? So you’re looking back. You’re making decisions. What worked? What didn’t you identify with, where you’re at in the gap and then you plan forward, okay. And we’re not going to go deep into the plan forward yet. Any questions or do you want to have conversation around. So that’s the look back on sales metrics. And I still want to talk about inventory and financial.

Josh Hadley 00:14:29  Yeah. There’s so much there’s so much to dive into there.

Josh Hadley 00:14:31  but I think what the biggest thing I just want to point out is like understanding how you won and then being able to double down on this is how I won. So how do I do more of that? And I think that that like Backwards planning or revenue map as you call it, right in reverse. Like looking at, hey, how did we actually get to this point? I think is one of the things a lot of people overlook, and they’re just constantly thinking about the future but not knowing, hey, this is what actually got you to this point, and you can double down on it and see even better results.

Christyne Gray 00:14:56  Yep. Exactly. And then see missed opportunity and make sure that you’re capturing additional through change, decision making or added initiatives. You can capture missed opportunity as well as doubling down into what worked right. And what you just explained when you just reiterated is you define the lookback, the gap. You’re standing in the gap, what worked and what didn’t, and then how do we plan forward and what does that actually look like? So looking back, that’s the sales metrics looking back then on your inventory metrics.

Christyne Gray 00:15:20  And this is where it gets since your audience is that creative that is designing and they’re building a brand and then they’re manufacturing their own designs and then bringing them to retail. That’s the bulk of your audience, as we discussed and as what I’ve witnessed by listening to your podcast, Excuse me, your podcast, when we’re looking at our inventory metrics, one of the largest areas of, I’m not going to say disconnect, but probably over commitment is to our own styles, where we continue to go very deep on any given product category or skew or like skew. We continue to go deep because as a creatives, we’re also very attached to our designs. And so bringing an objective approach to your inventory needs analysis is so important. And inventory planning, when the work that we do with Amazon sellers it even just your your seven figure sellers, we do find that a lot of them aren’t inventory planning to the extent that they should be especially the creative where we’re not going just going to market and buying and walking away with that product and somebody sending sending it to us upon order when you’re actually creating it and then manufacturing it yourself, that inventory planning is even more critical because you’re actually placing that order.

Christyne Gray 00:16:23  You’re trying to decide minimum order quantity is how deep are you going to go on that order reaching your minimum order quantities, maybe needing to renegotiate some of those minimum order quantities? When do we not place re orders for that particular skew and move into another design. How deep how wide do we really, truly go? You’ve got to be able to Understand what your customer’s desires are, but also be willing creatively to retire a design even though it might be your most love. But it also, there’s a lot of power in retiring a design, recognizing that it probably has reached its peak and we need to retire it for now. It doesn’t mean it can’t come back later, right? It’s the most love that can come back later. But when do we offer new designs and just keep the evolution of our brand going and not being emotionally connected to what we love that we design. And that comes down to that inventory planning by category, by design and for the season. When do we make the shifts and how deep or wide do we go on our designs and what we bring forward for our customers? And that truly does start to show up on your returning customers and your new customer rates, right? Like you’re returning customers.

Christyne Gray 00:17:17  That’s where it can get critical. If I come to your website or your Amazon store, and I keep seeing the same thing over and over again, but I’ve consumed it past my desire. And now you’ve got inventory stock sitting there. So it’s the balance of knowing and understanding. I like to coach planning by season versus planning by month is planned by season. What does your product mix look like by season? How deep or wide should you go and what is your pricing strategy, especially selling on Amazon, making sure that we’re selling and pricing for profitability, taking into consideration our Amazon selling fees. What does that look like and what are your unique to you? standards. Right. For markup, because you’ve got to be able to have a healthy profit margin. We coached to a 40, 60, 40 rule is with your Amazon fees included. If you can get a 40% cost of goods sold in a 60% gross profit margin, and we’ve got plenty of Amazon sellers that are doing that. You’re sitting in a zone that is very healthy for profitability, because then that allows you 40% for expenses and 20% for profitability.

Christyne Gray 00:18:14  So I coach to a 40, 60, 40 rule, which gives, I’m sorry, 40, 20, 40, 40% cost of goods sold, 20% profit, 40%, expenses. So relative to your inventory metrics, then if you do a quality check on how much you know about your own look back inventory metrics and where you want to as listeners, where you want to hone your skills, it comes down to what is your turn rate on each of your categories. So what’s your inventory churn rate on each of your categories? How many SKUs do you have in each of your categories? Churn rate is going to tell you whether you should be going more wide versus more deep, because we’re wanting to maintain a healthy churn rate that’s going to differ like your your specific best in classes. The way I coach it. What’s your best in class inventory, churn rate by category, by season is going to depend on what product you’re selling, right? Like what brand are you in. So there’s some variables there that are hard to coach and provide information on in a podcast.

Christyne Gray 00:19:06  So your inventory is your initial markup and then adding in. What is your Amazon selling fees? If you’re an Amazon seller primarily, what is your maintained markup? How much are you having to discount your product by? Your customers love to clear it out of your warehouse so that you can move on to additional products. If you have a high discounting and markdown, that means that you went to deep in that product or that product category, and you need to release it and just be done, like move on from it and make sure you’re bringing in new, fresh merchandise. And then and then your turn. Right. So initial markup maintain markup. That’s what you’re discounting. And then your inventory turn rate that’s going to tell you everything you need to know relative to your pricing for profitability. Whether you are selling through or not, you’re having to discount meaning did you order too much or are you going too wide versus too deep or too deep versus too wide? And are you pricing for profitability? What questions do you have there? And that’s a look back.

Christyne Gray 00:19:54  You look back at the data, find the wins, duplicate the wins.

Josh Hadley 00:19:59  Yeah I think that that’s that’s super important. Maybe give us some maybe like case studies or scenarios with those Amazon businesses that you’ve coached where you’ve seen like what are the errors that they’ve made and what are the signals where they are winning and doing well in different categories.

Christyne Gray 00:20:12  So one of the overarching errors that I do see relative, I’m going to stick with, in this answer, I’m going to stick with the inventory. Right. Because it is our largest investment. And so one of the largest errors in repetitive errors that I am seeing is the investment into inventory. How much inventory are you actually holding at any given time, and maybe even have a line of credit or some debt on that inventory. And how quick is it turning? Because when I will say that 95. The random number, but in my mind is a very high percentage. Most of our customers that come into our coaching, students that come into our financially fabulous coaching program, whether it be in a group setting or on a one on one setting, I am finding that they are far overstocked in inventory than they need.

Christyne Gray 00:20:51  A lot of them have 2 to 3 to even a year’s worth of inventory, 2 to 3 seasons, or even a year’s worth of inventory on hand. That is more than what they need, right? So really, truly knowing and understanding what quantity of inventory in dollars do you need to have on hand at any given time relating that back to what your, the timeline of getting that product right, like, what’s the delay in you getting the product once you get the order is at eight weeks. Once you place your order to receiving it, is it 12 weeks? Knowing the delivery cycle, what’s the minimum order quantities and understanding how much above and beyond the minimums do you need to actually order or renegotiate your minimums? So overstocked inventory is a huge, huge issue with the creative, manufacturing and retail entrepreneur. To the point where I’ve got multiple, multiple incidents where we can where we come in and we coach two inventory quantities, we find the right product mix across the product categories, and we start to downsize inventory in order to increase our inventory turn rates.

Christyne Gray 00:21:46  And we rapidly pay down line of credits because of it. Okay.

Josh Hadley 00:21:50  So what’s a healthy inventory turnover ratio.

Christyne Gray 00:21:53  So again inventory churn rate is also going to depend on the brand and what product you are bringing in. If so apparel for example. So apparel would be a six times term. If you’re coming in and you’re in the gift market, you’re in children’s men’s gift home or specialty items. You’re going to be around that four times. Turn is what I would be looking for. So a majority of your customer base here or your listeners is likely going to be on a four. I wouldn’t hesitate to bring a four up to a five, though. Honestly, in the fast demand of consumer and changing needs of consumers and how we change what we want and what we like in the newest, latest and greatest product I coach to hire turns long as especially when you’re manufacturing, if you can get your manufacturing to around 8 to 10 week cycle, you could easily accomplish a five times to six times turn.

Christyne Gray 00:22:35  And I have a fashion entrepreneurs who are actually pushing more of a seven times ten on their decision making, because it is just a fast in and out of what our consumers want. We don’t want to be stuck.

Josh Hadley 00:22:46  Yeah. So what do you what do you do if you have, you know, if it takes you 4 to 6 weeks just to have your manufacturer create the product, and then it’s going to sit on the water for another month or two, right, until it actually hits Amazon’s warehouses. So you’re really looking at like a three month, four month lead time when all of a sudden, so what’s going.

Christyne Gray 00:23:03  To happen there is, is when you are planning forward. Right. Like right now we’re looking at that look back of the seven year. What is the inventory telling you. But when you start we’re automatically right now in our conversation shifting to the plan forward that you’re seeing on your infinite loop in this conversation, which is beautiful because right away you’re seeing, okay, how do we go from a look back to a plan forward? Right.

Christyne Gray 00:23:18  That’s the basis of your question. So when you’re starting to plan forward relative to your inventory, you need to have an inventory plan in place. So the inventory plans that are delivered in our financially fabulous coaching program, we teach the entrepreneur to create, design and maintain an inventory plan independent of advisor ship, because we want you to be able to plug in play scenarios and really plug and play your unique circumstances, like your lead time that you need on your orders and how long it’s in transit. So when you know that you’ve got, let’s just say, an eight week delivery from order to get that product you would be looking at. If you’re looking at right now to say, I’m going to plan my inventory and start to order for my, my winter and my spring summer season of 2025. Right? Like spring summer, for example, you would look at it to say, I need to start to here’s my inventory plan for spring summer of 2025. That’s the plan. That’s how much inventory I need.

Christyne Gray 00:24:05  Now I back into what are my order dates based on lead time that you need? Okay, so it all comes down to having that foresight of knowing and understanding what your inventory needs are on that season that you’re ordering for and then backing into. Like I said, the delivery date is just to repeat it in a different way. Yeah, yeah, it all comes down to an inventory plan. So when you’re planning forward, you and this is actually it’s delivered with it’s part of our financially fabulous coaching program. When you’re planning your inventory forward, you’re looking back. You’re identifying how did your inventory perform. And maybe you’re at a two and a half to a three times turn. You want to get better, and you want it to be a four and a half to a five times turn. Maybe your margins aren’t real. Your initial markup was a little bit lower than best in class for you. We would help you determine that because again, there’s different guidelines based on what industry you’re in and what products you’re selling.

Christyne Gray 00:24:50  But maybe your initial markup needs to have better pricing at the front of that retail price. So that would come down to identify that you maybe need to go back to the drawing board and do some renegotiating with your manufacturer so that you can get better initial markup, then maintain. Like I said already, it is a direct reflection of you bought too much product, you’re discounting it to get rid of it. You’re buying your customers love. So once you know those metrics from a lookback standpoint, how you are performing, we go into that plan forward phase where we’re basically, if you think about it, from just planning your roadmap forward financially relative to your inventory, you put in your coordinates. What do you want to accomplish? I want to accomplish a five times turn. I want to accomplish a 33% cost of goods sold on my initial markup. I want to stay within a, let’s just say a 5 to 7 to 8% discount. How do I do that? What does that mean when I’m buying inventory.

Christyne Gray 00:25:34  So that desired and planned turn rate at a five times turn with, let’s say, a 33% cost on our product, that will give you exactly where you cost dollars, that you need to be spending an inventory for any given season and month. Then that’s how you back into your order dates.

Josh Hadley 00:25:51  Interesting, I like that. All right Christyne, keep keep walking us down.

Christyne Gray 00:25:55  So your look back then let’s just touch one more area of your look back. We’ve talked about sales metrics and inventory metrics. We can’t forget financial right. Like sales and inventory is coming out of your point of sale or your your channel selling wherever you’re selling your product. That’s where that data is coming from. But then we’ve got to also take a step into are we reviewing and understanding, and can we rely on the financial statements that either we are producing in-house or we have outsourced and our, you know, procured accountants or engaged accountants is producing for us? Do we understand them? Can we rely on them? Are we getting them on a timely manner? And are they in a retail specific format that actually tells us the story of what our business is doing financially? So your financial metrics from here’s some more paper and pen.

Christyne Gray 00:26:35  Right. So take notes. So on your financial metrics, what you’re looking looking for from a lookback standpoint is your your cost, your top level of your financial statements is obviously going to be your revenue less your discounts less, your refunds less, your cost of goods sold less, your Amazon and your channel selling. What is your cost of sales and what is your gross profit margin? And is that in a healthy rate? That’s that initial markup. Maintain markup concept on our inventory. Are we at a healthy rate. So when we’re coaching best in class 4020, 40, we want a 40% cost of goods sold to our selling and our net sales. Right. Gross sales minus discounts minus refunds equals net sales. We would like our cost of sale to be 40%. That gives us a 60% gross profit margin. So when you’re looking at your financials, can you see that on your financials. Are they in a format that gives you that data. And if they are not, you need to either speak with your accountant to get your financials is delivered to you in a retail specific format, and hopefully they understand your industry or make a shift so that it can be in a retail specific format.

Christyne Gray 00:27:33  And with somebody that understands your industry, because we speak a different language, you can’t have a former tax accountant and accountant, you know, like farmer, somebody that comes in and they’re manufacturing, farming, you know, all professional services and retail. They’re not going to understand our language and what we’re looking for. So that gives you your gross profit margin on your financials. Then take a look at your expenses. Are your expenses on your financials just in one row. Just a list of expenses. And they’re all alphabetized, but they really don’t tell you a tell a story. Yes. They say how much am I spending on advertising and rent and compensation? But do you know if you’re in a healthy range in any given expense category. So pen to paper again here on a note. And again we can put these in the show notes for you guys is when we’re organizing here at profits now because we are an accounting firm as well. We’re in a coaching and advisory firm. Our accounting division and our tax division supports our coaching and advisory because we need the data, which is this conversation.

Christyne Gray 00:28:21  So when you’re looking at your overhead, we’re looking at that 40% best in class, we’re always protecting 20% profit no matter what. If your cost of goods sold is higher than 40%, you would want that would have to shave off of your operating expense allowance because we want to protect 20% profitability, right? So you’ve got 80% play between your cost of selling and your expenses. But when you look at your financial statement, if it’s just a list of alphabetized expenses, they mean nothing to you. How do you make decisions? Where do you cut back? Where’s the guide for you from a data driven decision making and strategic standpoint, what we want to do is we want to organize your expenses into five categories. And those five categories are your selling expenses, which is going to be your your your selling expense is going to be your retail supplies, your shipping costs or your shipping supplies. Anything it costs to get the product into the consumer’s hand and provide the your brand experience, it is going to be your marketing expenses, your advertising.

Christyne Gray 00:29:11  It is going to be your point of sale and your technology costs for selling. It is going to be any design and branding and website costs. That’s all going to be underneath your selling expenses. So we want to look at our selling expense and say, what does it cost for us to actually maintain and deliver our brand experience, as well as get our product into the hands of the consumer? And with that selling expenses, I would put that at about 10%. Unless you don’t have the occupancy need, like if you’re storing your products at Amazon and you don’t have a lot of occupancy and warehouse expenses or a lot of you’re on your online space, right? Like your brick and mortar, you’re where you’re residing to sell isn’t physical space. We shift from occupancy up to selling so we can have some shift in some of these numbers. Right. There’s flexibility here. Which then leads me to occupancy. Your occupancy is your rent. Whether it be retail space, warehouse space. It’s going to be your repairs and maintenance on that space, your utilities, your security.

Christyne Gray 00:30:03  That’s your occupancy. That should be at 13%. And again, if you are warehousing at Amazon facilities, you wouldn’t have a lot of warehouse space. So you might be at a low percentage in your occupancy expense. That 13% can then be shifted up to selling. So you’d raise your 10% by the discrepancy there, right? Like you’re just reassigning it because your occupancy space is at Amazon. That is your selling expense, right? Then we’ve got your compensation. So your team compensation, your officer salary as an entrepreneur. what it what it your your operational role what you’re paying yourself for operational role that if you weren’t doing it, you’d have an employee for it all compensation would be 13%. That’s benefits taxes and wages 13% is a healthy margin. And then you’ve got your admin and your operating. We’re going to reside right around that 4% there. And again you might have to blend those numbers a little bit differently between those five categories. But the goal is to get them to be 40%. As long as you have 40% cost of goods sold, 80% total between the two.

Christyne Gray 00:31:01  So you can shift. I’m just giving a guide, right? So when I coached to a 40, 20, 40 cash flow management rule, it’s protecting the middle that 20%. Okay. So that’s how financial look back. You’ve got to be able to rely on your financials, your profit and loss to tell you where you are or are not overspending money you’re selling expense category. That’s an investment category, right? Like we never want to shortchange our selling. And all too often when we talk about pitfalls and areas that I see concern, all too often I’m seeing entrepreneurs overspend in compensation, overspend in occupancy, and then they are scrapping the success of their selling and they’re not able to advertise like they should, which is where we get in that holding or that plateau pattern on our seven figures to eight figures, because we’re not investing and instead we’re overspending. Okay. Yeah. So I do encourage the 40% spend if we can and just settle with the 20% profitability if you can, because that gives you the profit.

Christyne Gray 00:31:52  If you’re lean in any other area, take the difference of that 40% where you’re lean and get it into a really good strategy for marketing your business because that’s investing in. Yeah, or professional development. Right. Like sometimes you got to take a step back, go into professional development. No one understand where you’re going to be investing. And is it good investment choices then invest in but commit to that 80% cost of goods sold and operating expenses operating investment. We’re going to call it that operating investment to protect and grow your 20% profitability. Strangle your business through resources. Yeah, but we’ve got to allocate them accordingly. A lot of time on the lookback. But it’s really truly part of that planning forward. Right. So in that discussion right there where I was talking about the 4020, 40, that’s a lot of your planning forward. If you look at your financials and you have them organized into the five categories, and you understand your percentage of spend in each of your category relative to your net sales.

Christyne Gray 00:32:41  That’s your look back. You see what’s working, what’s not, where do you need to make business decisions? Spending decisions that are at a healthier balance that’s part of your planning forward. Then you map it out. Where are you willing to spend money? So we coach to an up level rule when it comes to our financial metrics, is when you are looking at how you’re going to spend your financial resources after you’ve made the sale or you’ve brought capital into the business. Is that spend going to uplevel your business overall and its ability to reach your goals? Is it going to uplevel your ability to make the sale and invest into the systematic and strategic sale that continues to grow? And does it grow in uplevel you as an entrepreneur so you can continue to expand this business into its vision. That’s that uplevel analysis. And if you say no, it doesn’t meet any uplevel criteria, then it’s a wasteful spending. You’ve got to reanalyze why you’re spending it.

Josh Hadley 00:33:27  Kind of makes a lot of sense. Now, Christyne, we’re coming up on time here.

Josh Hadley 00:33:30  So my questions would be for you are what are some quick hitting wins that you could give for our audience of, hey, I see entrepreneurs making a lot of these mistakes in the e-commerce industry. Can you rattle off a good number of some specifics that they can do today to improve some of their financial metrics?

Christyne Gray 00:33:46  So like I said, get control of your inventory. How much inventory do you really, truly need to have on hand at any given time through each of the seasons? That’s so important because that is your largest investment. That’s likely why you have debt. If you do have debt, make sure that you’re living in that 40, 20, 40 cash flow management rule that you are protecting your 20% profitability. And if you don’t have 20% profitability or it seems like a far stretch, really deep dive into why you do not. Is it at the cost of goods sold level and your markup strategy and your selling tactics, your percentages and your metrics? Or is it at the expense level? Where can you trim and how long will it take for you if you were to project it out? How long will it take for you to get there? So that leads me to the final is projecting.

Christyne Gray 00:34:23  It is so important to plan your inventory which is projecting it out. Plan your profit and your cash flow, which is you know, that 40, 20, 40 profit cash flow planning that we talked about. Plan it out and identify where your cash flow is each period over period. So in our financially fabulous coaching program, we have a cash flow projecting tool that takes your plan forward to your revenue mapping, to your inventory planning and your expenses, and literally will show you that if you start this month, if you go into September and start it with, you know, $50,000 in the bank, where do you end next August with what you have already mapped out? So strategic planning and projecting is so important. And allow yourself the opportunity to plug and play scenarios. If I do this, if I make this decision, what is my calculated outcome financially versus this secondary plan B decision? What is my calculated financial outcome? Yep. And don’t be scared of the results. That’s the big thing too is don’t be scared of deep diving into the number and knowing and understanding the results, because that’s where the power and the empowerment is 100%.

Josh Hadley 00:35:21  Christyne, excellent takeaways here. You know, I love to leave my audience with three actionable takeaways from every episode. So here are the three actionable takeaways that I noted. So number one, you’ve got to be able to have that financial lookback period. And you talked about the five different buckets that you should classify, kind of like your expenses into, so that you can actually drive business strategies from the insights that you gleaned from those buckets. For Amazon specific businesses, I would argue there’s there’s even three main levers that you should really be focusing on that are going to move the needle significantly. So the three buckets that we are constantly monitoring is number one, what is our Cogs cost of goods sold as a percentage of sales. And so this is the cost of just how much I’m buying the product from my manufacturer. And any tariffs, any, you know, shipping costs related to bringing that product landed here in the US. So what are my landed Cogs as a percentage of sales. Is that number increasing or decreasing year over year Okay.

Josh Hadley 00:36:14  So that’s number one then. Number two they’re on that second bucket is we are measuring our FBA fees. So you’ve got the 15% referral fee that’s locked in. It doesn’t matter what you sell the product for. You’re paying Amazon at least 15%. But those FBA fees, which Amazon is only increasing the fees year over year at this point. You want to make sure that you are adjusting to these FBA fees accordingly by raising your prices or finding better products with higher profit margins. So year over year, even though Amazon is raising their fees, you shouldn’t just be losing 3% year over year. As Amazon raises their fees, you need to make sure that you’re adjusting your product categories. You’re making sure that you go in and you’re raising prices accordingly. And as long as that FBA fee percentage stays flat year over year or maybe improves year over year, you know, whether you’re winning or losing. And then the last big bucket that I think that, Amazon entrepreneurs really need to focus on is going to be the total advertising cost of spend or sales, which is your taco’s number.

Josh Hadley 00:37:08  Okay. And so that you can we’ve I’ve heard of varying ranges, people spending 20% of their sales just on advertising and as little as, you know, three, 4 or 5%. I think there’s a fine balance for every business, but it’s measuring those year over year changes because those three buckets, the Cogs, your FBA fees and then your your Amazon advertising, I’m going to argue that’s going to make up 66% of your entire spend for your business. So you’re not left with much after that. If if that’s where all your money is going, what are the actions you should be taking? Is focusing on what are the levers I can do to decrease my cogs, lower my FBA fees? Product packaging is one of those that you could tweak. Could you go from a large standard size item down to a small standard size item? On the advertising front, are there new advertising campaigns that might have a better return on ad spend for you? And are you reinventing things? Or did you just hire an agency and you’re just crossing your fingers that they continue to operate things for you? Those are the three key levers in any business.

Josh Hadley 00:38:05  So that’s kind of those are the three actionable takeaways that I would leave for our guests is like, what are you doing in each of those three big buckets that actually drive significant expenses to any e-commerce business. Would you add anything to that, Christyne?

Christyne Gray 00:38:16  The only thing I would add to that is see if you can try to protect that 20% profitability, because that 20% is what is going to fund growth in your inventory, purchasing your inventory. You keep on hand, paying you profit distribution, taking on any additional risk in your business for goals that you’ve said like visionary changes and paying you as the entrepreneur. So it’s balancing it. I love that.

Josh Hadley 00:38:35  I totally agree, and I think, you know, the margin squeeze is on right now. You have overseas competitors lowering prices. It’s a race to the bottom. But as much as you can do to protect that 20% profit margin is is really important, especially if you want to be able to fund new growth, which comes from investing in new product.

Christyne Gray 00:38:52  Launches, R&D.

Josh Hadley 00:38:55  Christyne, I love to ask every guest the following three questions. So here we go from the top. Number one, what’s been the most influential book that you’ve read in life?

Christyne Gray 00:39:01  You know okay, most influential for me is Atomic Habits because I can I like coordinated chaos and so I constantly refer back to it. Okay, Christine, you got it real yourself back into that coordination. Yep. Atomic habits. I just feel like it’s a read, read and over read when we feel like we are spread too thin or disorganized or chasing shiny objects, whatever it might be, as entrepreneurs as opportunity can get us running into many different directions, it always reels me right back in.

Josh Hadley 00:39:26  That is a fantastic book recommendation. It’s one that you could revisit every six months and find something.

Christyne Gray 00:39:31  Because you read it differently in whatever phase you’re in or whatever you’re experiencing personally and professionally. Yeah.

Josh Hadley 00:39:37  Great question number two. What is your favorite AI tool or software tool that you’ve been using that you think other people should?

Christyne Gray 00:39:43  I’m loving ChatGPT and the pro version I really am.

Christyne Gray 00:39:46  That extra $20 a month gets you so many creative tools as well as fun tools. But I have lovingly called my name Melinda, so my ChatGPT and I are really closely connected at this point. So yeah.

Josh Hadley 00:39:58  Give me some use cases that you’ve been using. You know, for.

Christyne Gray 00:40:00  Me, from a creative content standpoint, because I am so customer facing that when I sit down and I’m working on content or blogs or really just training and coaching material, I know what I want to say, but it’s hard for me to put it into full scripts. And so I’m usually just a mind dump into my ChatGPT on all the things that I know, and it just gives me a very eloquently spoken output that saves me a ton of time, gets trained for my voice at this point, because I’ve obviously go back and rewrite it and adjust it. And that’s what I love about the pro version, is it knows my voice, but the more I mind dump into it, the easier it is for me to extract and provide my own knowledge and insights and expertise for my consumer in my own voice.

Christyne Gray 00:40:41  But you got to work at it, right? It’s just not automatic because you can get some pretty shoddy results unless you spend some time with it and give it enough insights to be your own voice.

Josh Hadley 00:40:50  Yeah. Agreed.

Josh Hadley 00:40:51  All right. Final question. Who is somebody that you admire or respect the most in the e-commerce space that other people should be following? Okay, I.

Christyne Gray 00:40:56  Know this is really cheesy for me to say this, but I’m loving your podcast. I really am. You know, I found your podcast. I’m loving it. I love the insights. I love that you have a very embedded, approach with the e-comm business in that you’ve experienced it. You’ve built your own business. You are not only coaching, advising and investing, but you are living it as well and the diversification of your guests. I’m loving it. Like I said, I know that’s probably a cheesy answer on your podcast, but it’s fun and it’s new for me and so I’m enjoying it. I can’t recommend it enough.

Josh Hadley 00:41:22  Awesome. Well, Christyne, I appreciate it. Your check is in the book.

Josh Hadley 00:41:25  Yeah. No checks.

Christyne Gray 00:41:27  I think we can honestly talk all day long. So this has been.

Josh Hadley 00:41:29  A good I think we appreciate it.

Christyne Gray 00:41:30  We didn’t even get to all of the seven steps. You guys saw them on the screen? Yeah, we’ll make sure that they’re in the show notes. But we touched on a lot of facts, though.

Josh Hadley 00:41:37  So Christyne, I know we weren’t able to go into everything. So if people want to learn more, where could people go to find more about you, your coaching programs, etc.?

Christyne Gray 00:41:45  How does she profits now Dot com and you will find our professional services there, as well as our financially fabulous coaching program. If you want to have a one on one chat, there’s a link for you to jump on to my schedule for a discovery call, or even just a profit breakthrough session, and it might be the easiest and the best way to connect so that we make sure that we have a right fit scenario.

Josh Hadley 00:42:02  Awesome. That’s wonderful. All right, Christyne, thank you so much for your time. Today was a pleasure having.

Josh Hadley 00:42:06  You on the show. Thank you.

Christyne Gray 00:42:06  It was wonderful, I appreciate it.