As the saying goes, “The devil is in the details.” At the same time, a popular aphorism states, “You’ve got to spend money to make money.”

I take issue with that aphorism because there are more exceptions to it than examples. In reality you’ve got to make money to make money, then take a disciplined approach to how you spend it. Broadly speaking, there are two important parts to making money: first, earning revenue, and second, but no less important, spending as little of it as possible on your costs.

It sounds so simple, doesn’t it? If only!

Being flippant aside, controlling your costs is crucial. When times are good, and your revenue just keeps going up, it’s easy to become lax about your costs.

Except that when times aren’t good, that’s when you find out that lax attitude towards your costs comes back to bite you. One of my favorite sayings is that “it’s better to be prepared than postpared.” You’re better off keeping close tabs on your costs, no matter what.

I’ve got one client dealer, an IT company, who does significant annual business with me. In fact I usually get a purchase order from them 1-2 times a week, every week.

There’s just one thing: most of their POs are for one (1) unit.

Years, ago, pre-COVID I think, I called my contact at the client and basically said, “Hey, you guys are getting killed on the freight charges for sending you one or two things weekly. Have you considered batching your orders to reach the threshold for free best rate ground shipping?”

His answer was twofold. First, due to the way their work software is set up, purchase orders need to apply to one of their client customers at a time.

Second, he said “That’s okay Lee, we build the freight charges into our clients invoices, so they’re the ones paying it.” Well, fair enough, I agreed. Ultimately, if my client doesn’t have a problem, then I don’t have a problem. That’s the only example I’ve ever heard from a dealer where their system is set up for one client per purchase, but it’s big world out there, and I don’t claim to know everything.

Almost all of my other dealer clients do batch their orders to make use of our free shipping threshold to help manage their costs. So that one dealer is an outlier.

That said, the cost of freight to receive your inventory is a small cost compared to the actual cost of your inventory. I have to keep my word limit in mind here, but long story short, inventory is a necessary evil: You need it in order to sell it to your clients, but carrying too much of it ties up cash.

I am aware that this is a basic fact that everyone should know, but when I think about the dealer clients I’ve known over the years who ended up in a challenging spot, struggling, and in many cases going under, being heavy on unsold inventory was almost always a major factor in their demise.

With your inventory the whole point of it is to turn it back into money as quickly as possible, and repeat the process. Again, I know this is painfully obvious. But if there’s one thing I’ve learned is that the best way to not have a problem is to not let it become a problem in the first place.