Managing Cash Flow and Reinvesting Your First Profits

Resale businesses die from cash-flow mistakes, not from a lack of good items. Your €500 must cycle, not sit in a shelf.

Separate the money

Open a second account or a dedicated prepaid card for the business. Every sale goes in, every purchase comes out. Pay yourself only from realised profit, never from the inventory budget.

The reinvestment rule

• First €100 of profit: hold as a reserve for returns and repairs.
• Next 50%: buy more of what already sold.
• Remaining 50%: test one adjacent category.

Do not scale a category until you have sold at least ten items in it and know your average days-to-sell and average margin.

Watch these numbers

1. Inventory age: anything unsold after 45 days gets a price cut.
2. Return and dispute rate: above 5% means your descriptions or quality checks are weak.
3. Average profit per item: below €15 makes shipping and admin eat the margin.
4. Cash conversion: how many days your money stays tied up in stock.

When to stop

If a category consistently produces low margins or slow sales, stop buying it. Sunk cost is not a reason to continue. Liquidate the remaining stock at cost, recover the cash and move to a better category. A small business survives by reallocating money quickly.