Five Minute Friday: Your Inventory Is Cash—Here’s How to Turn It Faster

Boutique Chat

Ashley Alderson

Business, Marketing, Retail, Boutiquetips, Fashionindustry, Fashionbusiness, Entrepreneurship, Businessstrategy

5 • 853 Ratings

🗓️ 15 August 2025

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

In this episode of Five Minute Friday, we’re continuing our Know Your Numbers series by breaking down another retail metrics—your turn—and how it directly impacts your cash flow and profit.

If you’ve ever had great margins on paper but no cash in the bank, this episode will show you how to calculate your turn, understand how quickly your inventory “spoils,” and apply strategies to move product faster so you can keep money flowing through your business.

🔑 Key Takeaways:

Understand What Turn Really Means

Learn the definition of turn rate and how it measures how many times you sell through your inventory in a given period.
Understand why a high margin doesn’t always mean more cash—and why turn is a better cash flow indicator.

How to Calculate Your Turn

Use the simple formula: Total Sales ÷ Average Inventory at Retail.
Identify your category benchmarks (e.g., women’s fast fashion: 5–6 turns/year; luxury: 3.5–4.5 turns/year; home & gift: slower turns).

Prevent “Spoiling” Inventory

Learn the expiration dates for your category’s inventory and when to take markdowns to free up cash.
Recognize when merchandise is aging past its prime and how to move it before it becomes dead stock.

Pro Strategies to Improve Turn

Track your on-hand inventory monthly to know exactly how much cash is tied up on the floor.
Invest in faster-turning categories to improve ROI.
Use marketing tools—social media, email campaigns, store placement—to push slow movers before resorting to markdowns.

Not a member yet? These are the kinds of strategies and tools waiting for you inside the Hub to help you grow smarter.

Want more? Join the Boutique Hub: https://tbhub.co/podcastjoin

Transcript

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0:00.0	Being a retailer ain't easy.
0:02.4	That's why we at the boutique hub are going to be coming to you with a new series called
0:07.2	Know Your Numbers.
0:08.4	We're going to get the facts on what is the most important to drive profit, drive cash
0:13.7	in your business, and really have you feel in control over your future.
0:20.0	Numbers are black and white.
0:22.1	It's the one thing we record every day.
0:24.6	And we're going to teach you how to make the most of tracking your KPIs and metrics.
0:30.3	Let's jump in.
0:31.4	Now let's turn our attention to turn.
0:34.4	You see what I did there?
0:35.7	Okay, so turn is a really important metric in retail. And some
0:39.6	retailers are really familiar with the concept. Some, it's going to be a bit newer to them. So I'm
0:45.1	going to try to break it down in simple terms. It can get a little tricky. So try to stay with me.
0:50.6	And of course, as always, we at the boutique hub are here to help answer any questions.
0:56.0	So the first thing that you need to think about when you think about Turn is really own that retail is a cash business.
1:04.0	We like to talk about margin a lot. We like to talk about profit a lot. And at the end of the day, the profit on a piece of paper
1:13.4	that your accountant tells you have is not cash in the bank. So you can have a great profit margin
1:19.9	and you can have no cash in your bank account. Being a great retailer and business owner
1:26.0	depends on your cash flow. So turn is going to be a great retailer and business owner depends on your cash flow.
1:28.6	So turn is going to be a great indicator on how you're performing and how your cash flow is potentially showing productivity or is it kind of getting tied up in inventory.
1:41.8	We often call ourselves buyers, but really you're an investor. You're investing in inventory. We often call ourselves buyers, but really, you're an investor. You're investing in
	...

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