Cash Flow Positive? Is it Possible to Have Excess Cash in the Bank During This Pandemic ....

Yes, it's possible.  Yes, my client went from being cash flow negative (building up debt on credit cards) to having excess cash in the bank account - yes, that is called PROFITS! 

In the normal flow of business, you purchase your inventory based upon your sales of products.  You would try and predict how much you will sell in the next season or the next few months (depending upon your lead time in ordering) and then place orders for merchandise consistent with what you expect to sell in that period.

Basic Example:  you sell $5000 of merchandise each month in the Spring.  So let's say for a 4-month period you would sell $20,000 in sales.  If your profit margin is a flat 50%, that means you need to have $10,000 of merchandise being delivered to you.  That's easy right?

But, most people do not include the inventory the already have on the shelf.  So, if you already have $10,000 on the shelf (inventory hangover), then you will soon have $20,000 of inventory on the shelf (inventory on hand) and you will have sold your $20,000.  At the end of the period, you will have NO cash left in the bank.  You paid your suppliers $20,000, you took in $20,000 in sales - thus, nada left in your checking account.

Now fast forward to the Pandemic, your sales are now lower, you must thus lower your purchases proportionately and seriously consider selling down that inventory hangover - converting stuff into cash.  With some good planning, you should be cash flow positive and generate Profits.

Then again, you should always be planning your purchasing like this and always be reducing your inventory hangover.  Sales of your hangover also count towards your monthly total sales. 

Helpful Tip:  Inventory ($) on Hand should be divided by your typical monthly sales to derive the "Number of Months of Inventory".  Think of this number as the number of months of sales needed to extinguish your inventory.  If this number is too big (relative to your industry), then you need to Have a Big Sale or cut your orders!

Example: Inventory on Hand = $20,000    Monthly Average sales = $5,000

So, Number of months of Inventory = 4.  This might be equal to an entire selling season.