If you think your Inventory is an ‘Asset’, think again.
Because it’s not ‘just’ inventory which is an asset, it’s “Optimal Inventory.”
If not optimal, it could just be the monthly fees you are paying while thinking that you are building an asset.
Inventory gets called an asset. Sure – technically, it will generate revenue one day.
But an asset that ties up your cash, charges you storage, and loses value every month it doesn’t move?
That’s not an asset. That’s a liability with good PR.
Here’s what the balance sheet doesn’t show you:
- Carrying costs on excess inventory run 20–30% of inventory value per year.
- Warehousing cost
- Insurance
- Obsolescence.
- Opportunity cost of cash that isn’t moving.
On a $500K inventory position – that’s up to $150,000 quietly leaving your business every year.
Not from a bad ad campaign.
Not from a failed product launch.
From stock you already paid for, sitting on a shelf.
And it shows up in 3 very specific ways for DTC founders:
- Cash trapped in slow-moving stock that can’t fund growth
- The wrong mix: overstocked on what nobody wants, stocked out on what sells
- The markdown spiral: discounting to recover cash, destroying margin in the process
The discount feels tactical. Cumulatively, it’s a slow bleed.
I built a DTC brand to $20M. Then watched it shut down.
Inventory waste wasn’t the only reason. But it was one of the loudest ones.
When you’re inside it, excess stock feels like a timing problem.
By the time the cash pressure becomes undeniable, you’re already behind.
Not all inventory is equal.
A $500K line in your balance sheet tells you nothing about whether that stock is working for you or against you.
The founders who get this right ask one question before every purchase order:
If this doesn't sell in 90 days, what does it cost me per month to hold it?Most founders have never done that calculation.
The ones who have don’t over-order twice.
3 Things You Can Do This Week
Step 1: Calculate Your Real Carrying Cost – Today
Take your current total inventory value.
Multiply by 25% (conservative midpoint).
Divide by 12.
That’s your monthly inventory tax.
Write it down. Most founders have never done this calculation. The number changes how you make your next purchase order decision.
Step 2: Pull Your Weeks of Cover by SKU
Divide current units on hand by average weekly sales for each SKU (Pick past 90 days data)
- Above 16 weeks → worth examining
- Above 24 weeks → active cash leak
You don’t need a new tool. A basic spreadsheet pull from your eCommerce platform does this.
The goal: know which inventory is working and which is sitting on the shelf.
Step 3: Find Your One Silent Bleeder SKU
Using your WOC calculation, find the single SKU with the highest weeks of cover and lowest sales velocity. That’s your first test case.
Price it to move – not to preserve margin. Recovering cash from dead stock is always worth more than protecting paper margin on inventory that may never clear at full price.
So here’s what I want to ask you:
When you look at your current inventory, do you actually know how much of it is a real asset, and how much is a fee you’re paying to yourself?
Arti is a fractional COO and eCommerce operations consultant helping DTC founders in the $3–$8M range identify and fix the six operational leaks quietly draining their cash – using the CORE5 OS framework built from scaling and closing a $20M DTC brand.