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Mastering Cash Flow for Six and Seven-Figure Ecommerce Stores

Before we dive in, I want to let you know that this post is especially for store owners with annual sales in the six, seven, or even multi-seven-figure range. It’s also great for those who are on the brink of hitting six figures.

Here’s the backstory: over the past month, I’ve had conversations with four store owners about money. What’s surprising—and it might shock you too—is that out of these four store owners who have annual sales of seven figures or more, three are facing significant cash flow issues.

There’s a common belief that once our sales hit a certain level (insert your dream number here), everything will get easier and money problems will vanish. We chase sales, thinking that reaching that magic number will solve all our problems. But for most store owners, it’s not true. 

I can relate to this personally. In my first business, which I ran for 20 years, I struggled with cash flow for years. It made me feel awful, wore me out, and led to poor decisions. This happened even though my accountant and banker assured me I was doing well and on track. I figured this was just the way business is, that it was normal. But it was truly exhausting.

I’d love to say I’m a genius who just knows all this stuff. But the truth is, everything I’ve learned about financial literacy, I’ve learned the hard way—by doing it. When I started my first business, I avoided looking at the numbers because I didn’t understand them and was maybe a little afraid of what I would find. I didn’t value that part of the business, which led to cash flow problems.


What I wish I had known when I was struggling with cash flow is this: If you’re running a six-figure-plus store and have cash flow problems, it’s a red flag. You need to stop, slow down, and figure out the cause. If you’re nearing six or seven figures, you know how to sell, so there’s a fundamental problem that needs fixing.


The 3 Most Common Causes Of Cash Shortage

  • Mounting inventory. Inventory purchases can eat up the cash you need for operating expenses, leaving you short for payroll or rent.
  • Debt repayments consuming your operating cash, especially with the ease of obtaining Shopify loans. They solve an immediate problem but take money back quickly, which doesn’t help in the long run.
  • You’re not generating enough profit in actual dollars, even if your margins look okay.

What NOT To Do When You’re Short On Cash

When cash is tight, it’s scary. As a problem solver who knows how to sell, your instinct might be to rush to fix the problem. But often, you’re just stopping the immediate issue, and not solving the root cause.

Here are two common mistakes that can make things worse.

  • Having a giant sale to generate quick cash.

It might solve your problem temporarily, but it won’t fix the underlying issue and could leave you in worse shape.

  • Borrowing more money.

    It’s tempting and easy with Shopify Capital, but it’s a band-aid that leads to more debt and less operating cash.

Instead of these quick fixes, address the fundamental problem causing your cash flow crisis.


3 Steps To Fixing Your Cash Problem

Step 1: Set Up a Dedicated Inventory Bank Account

First, set up a separate bank account specifically for your cost of goods. Each week, transfer the cost of your sales into this account. This account should be used exclusively for inventory purchases.

You may need to adjust how you currently manage payments, especially if you’re using a credit card. Determine a percentage of your sales, based on your margin, and deposit that amount into this inventory account every week.

Do not use this account for any other expenses, and avoid purchasing inventory with money that isn’t in this account. This practice helps ensure you’re managing your cash flow effectively and puts you on the path to increased profitability.

Step 2: Quickly Increase Your Business Profit

Next, focus on creating more profit in your business quickly. In episode 219 , I shared some ideas around pricing adjustments and adding a shipping option, both of which can boost your bottom line with minimal effort.

Additionally, if you’re spending heavily on marketing, consider cutting back on those expenses and leveraging the assets you already have. For example, reducing your marketing spend by 20% but increasing the number of emails you send by 20%. Look into collaborations [Learn more in episode 215] where you can acquire customers without incurring high costs.

Make a short list of actionable steps you can take right away to generate more profit and start implementing them.

Step 3: Take Time to Assess and Get Help

Finally, set aside dedicated time to stop running in circles and really examine your financials. Whether it’s for a day or a few days, step off the treadmill and focus on identifying the root of your cash flow problems.

Seek help in pinpointing the issues and discussing strategies to address them. This is where the hard work comes in. Many people resist facing these tough tasks, but remember, you didn’t end up here overnight, and you didn’t get here intentionally. Tackling the hard things now will pay off in a few months, and you’ll be grateful you did.


Get assistance from a professional who understands product-based businesses or from a friend who has been through a similar situation. Whatever you do, ensure you have the support you need because most cash flow problems are fixable, and you deserve to sleep well at night.


Don’t Normalize Struggle

Once you regain stability and predictability in your business and feel financially secure, you’ll be in an even better place. I don’t want to see you struggle. Having been there myself for many years and thinking it was normal, I can tell you it’s not pleasant. It’s critical to slow down and address these issues correctly. You’ll thank yourself later.

Remember, I’m cheering for you. If you know anyone who could benefit from this post, please share it with them.



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How To Get Control Of Your Cash

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