I saw a friend of mine yesterday and she asked me, ‘How’s the business going?’, Surprisingly, this emotion wasn’t what I felt first. I went on to explain to her my current ‘dilemma.’ It made me realise this is what I should write about this week. I’ve named this dilemma, ‘ The Inventory Trap.’

When you get that fire in your belly about an idea, something you want to bring to market, building something from nothing etc. Unless you’re a serial entrepreneur or have done a lot of work analysing different business, it’s unlikely you’ll be aware of some of the major challenges that lie ahead. I think this is where all that advice about, loving your idea or really wanting to be an entrepreneur comes from because when you hit these challenges, sometimes you actually think, ‘fjdaofj so;nvda ;fd.’ If I had known all of this would I really have chosen to do it? Or do it now? Reminds me of parenting. Haha. Sometimes it’s best to not know too much before you enter these really big challenges. It’s best that your primary motivations are love and passion.

So what is this Inventory Trap you speak of?

When manufacturing an item (unless you go for a production method such as drop shipping, where you carry 0 inventory risk), you are likely to come across the acronym MOQ (minimum order quantity) early on in your journey. MOQs are basically the quantity of inventory a factory is willing to fulfil for you. If we stick to the apparel space for now, factories that make huge quantities for well known high street retailers, are highly unlikely to want to take your order of 500 units. It’s not worth their while and often they aren’t set up to do this. At the other end of the scale you have manufacturers that will do sampling orders, sometimes with no minimums to fairly low minimums of about 100 units. However, I’m sure you’ve guessed the downside…the price per unit is high. Often very high.

I think of the Inventory Trap as agreeing to a higher number of units than you’d necessarily be comfortable with in order to keep the price per unit down. The motivation? You want to make at least some money on each unit you sell. I’ll take this one step further, many people probably fill in a spreadsheet and want to get to a place where they feel good about the money they’re making on each unit.

What’s so bad about accepting a high number?

You know I don’t think it’s as bad for every business. If you don’t have great variations in your product, then maybe go for it. However I think that most businesses in the early days will be learning what works, what sells and will want to make improvements/pivots quite quickly. Being saddled with all this stock you need to shift, can either lead to you having to dump stock by selling it really cheaply (which can be damaging to your brand) or diverting your focus from improving your product to desperately trying to sell what you have left.

Now think of Mummy’s Muse. I have various prints… in various colour ways; various garments…in various sizes. This isn’t some variation of imposter syndrome kicking in, with the gremlin on my shoulder saying, ‘what if you’re left with inventory because the world doesn’t want your product??’ No, it’s not that. The world is waiting eagerly 🙂 It’s the fact that sleepsuits might sell really well up to 12 months and then not sell any more. It may be that plain with printed trim does much worse than fully printed with plain trims. The dresses may be a huge success and I sell out where as joggers may be less popular. I can make all the hypotheses in the world, but I just won’t know till I start trading.

Also, if you don’t have a warehousing solution yet, where are you going to put all that stock?

High quantities, low cost price? Or Low qualities, high cost price?

Remember this post I wrote about spreadsheets? This is what it comes down to. I am going to try and stick to my guns despite all the temptation (and frankly sad numbers on my spreadsheet), to take a higher cost price and a low quantity. I’ve been psychologically prepping myself that I might make 1 / 2 / 3 collections that end up being ‘investment’ collections before I make any money. I need to test the brand, I need to test the product. I tell myself, Yewande you invest in businesses on the stock market – and that’s taking a bet. Now it’s time to bet on yourself.

Yewande you invest in businesses on the stock market – and that’s taking a bet. Now it’s time to bet on yourself.
Me

I’ll go into it more another day, but another factor that may raise my cost price comes down to the method of printing. I’ve decided (quite a last minute pivot) to go for agility rather than a method that again will give me a much lower cost price. I’m not ‘afraid’ but I’m also such a pragmatic person. I want the market to tell me what’s working and not try to shove my agenda and waste time and money if it doesn’t work.