Happy Monday!

I’m so sorry that I didn’t send out a newsletter last week. It was an exceptionally dope week and sometimes life & real business takes priority. I won’t even lie. Some really good shit started to happen.

Running a seasonal business also means I automatically have seasonal depression. We’re just a few days away from Spring and what do you know, things are looking up!

Here are some of the highlights:

1) A massive retailer came back out of the blue and we closed a deal in less than 48 hours. We ship the goods next week and can factor the order immediately with our bank. $70,000 we didn’t expect to have.

2) We liquidated two SKUS that we should have sold much quicker. I’ll talk more about this later and why liquidation is not such a terrible word and why its necessary.

3) We got approved for an incredible loan. The interest on the loan is 4% cheaper than our current debt and allows us to start to refinance.

4) We’re a month away from the Jersey City marathon and I’m banging out 10 mile runs like its nothing. If you’re in NYC from April 8th-17th make sure to reach out and lets schedule some matcha or a workout!

5) We got our 2023 P&L back and we finally moved away from Pilot to Finaloop for bookkeeping which is going to be a godsend.

Cash Flow Is King

Speaking of Finaloop! I want to give them a massive shout out for being an epic partner and what will become a huge part of our financial tech stack. We’ve been waiting for our contract with another firm to come up for months now and we were finally able to make the move last month.

They sponsored this newsletter today but I honestly would have no trouble writing about them for free because the product is that damn good.

If you’re like me, you are very impatient and want to know the financial status of your company right this second. You don’t want to have to wait a week, send an email to some accountant who’s getting extremely overpaid and then have to triple email them to get a response back.

Finaloop literally serves as your online bookkeeping service and does EVERYTHING in real time. So you legit know your numbers daily and how the business is pacing. Knowledge like this allows me to know that CROSSNET reduced its operational expenses by 30% in January & February, while reducing our total loss in January & February 2024 by more then 400% when compared to 2023.

One of the biggest mistakes I ever made at CROSSNET was removing myself from the day-to-day financial decisions of the business. We hired a CFO that was about $180,000 for our sub $10M business. What the hell were we thinking? I had zero visibility into my numbers and resulted in total blindness in terms of the financial state of the company. We ended up taking on bad debt, over hiring when we couldn’t afford it, and borrowing from Peter to pay Paul.

I could and should probably write an entire newsletter on financial literacy and how even if it’s not your strong suit, you need to learn the basics. With Finaloop you’ll get:

1. Real time P&L - Sales data is all reconciled to sources of truth. Finaloop cleans all the Shopify sales data that is very noisy and reconciles it with all our payment gateways. Transaction categorization is done using a super detailed chart of accounts based on ecommerce best practices (with the occasional input needed from my team about specific transactions).

2. Real-time cash flow - We all know that cash flow management is a careful balance for inventory-based brands. Seeing the cash flow status after each transaction is a game changer.

3. Real-time COGS - This has been the biggest headache with past bookkeepers and now it’s something I never even need to worry about. I had an initial 20 minute set up and now the data flowing through

Try out Finaloop for free using this link. They’re offering a special discount to my readers - Subscribe by April 15 and get 10% off your first 6 months. If you want a direct intro to the founder I can do that too, just ask!

Turning Inventory into Cash

You know what’s worse than your inventory collecting dust? You paying a 3PL to store that inventory for excess months and gather that dust.

It’s an epic feeling finally being in stock but its way worse if you’re depleting your cash flow and then paying a storage penalty to get this inventory. I’ll walk you through a real life situation.

We got a purchase order for a certain game for 650 units. Great. Guaranteed money. We then projected we’d sell another 500 units on our website and 1000 on Amazon. This was for a brand new product and we really had no understanding of the demand but like usual we said we’ll make the demand.

So here’s how this shook out and what we should have done instead.

• We purchased 2150 units of a SKU that we had never sold before

• The product cost $22 per unit, so $47,300 in purchased inventory

• We immediately shipped the 650 units to the retailer and made $26,000 off $14,300 of inventory, not bad!

• What I didn’t factor in was an additional $9000

  • The $4500 container

  • The $3000 customs fees to bring this inventory in

  • The $1000 unloading fee at the 3PL

  • The B2B processing of the order for $500

The business has now spent $56,300 to generate $26,000 in revenue back, with 1500 units sitting there hoping that we can sell this inventory in the next few months for at least $30,300 to break even. Every month the storage bills & warehouse labor eats into your margin.

These units ended up sitting in the warehouse for the last 16 months until I liquidated them earlier this week. This inventory took up 30 pallets a month at a warehouse, 50 units per pallet. An average pallet costs $15/month x 30 × 16 months = $7200

That means I PAID $7200 in storage costs PLUS put my business is out of $30,000 in cash to bring in this inventory. This meant I had $30K less in cash that I couldn’t use for bills, salaries, etc., and also got hit with a $7200 storage penalty. Dumb, dumb, dumb!

Man the things I wish I could go back and tell 24 year old Chris.

Shredding the Slopes🏂

Well I hope this was a great start to your Monday. It’s never too late to start trying to think 3-4 steps ahead and to see if these “genius moves” you have are really that smart after all.

As always, I’d love to hear from you! What questions do you have for me? Shoot me a response back to help my deliverability or email me directly at [email protected]

I’m heading to Denver tomorrow for a five day snowboarding trip with the crew. If you’re in town, I’m throwing an incredible dinner party for 45 people and we just opened up a few more seats. Sign up here before they are all gone!

Talk soon!

Onward & upwards,

Chris