🥗 DTC Finance School 101

Hey there, 

Welcome back for another bite to chew on. 

In our last newsletter, we talked a lot about how to become more financially efficient with your business, 

But today, we’re going to break down more of the specifics of what it means to be financially literate and how you can replicate our strategy to ensure the sustained growth (and profitability) of your business.

No, it’s not as glamorous as big wins, 6-figure days, or huge milestones,

But if you want to increase the chances of your business being around for the long term…

Then it’s time for you to enroll in the Obvi Finance school. 

If you don’t follow us on Twitter (which you should), then you probably missed our most popular playbook ever created - The Obvi Finance School Playbook

But you’re in luck

Because for a limited time, we’re giving you access at the end of this newsletter.

By the way - before we dive into this week’s newsletter, we have something that you might really like.

We want to ask YOU to be a guest writer of this newsletter, so it’s not always about our learnings from Obvi - but also learnings from how other companies are crushing it.

(Maybe that’s yours?)

The only thing you’d need to do is either:

A) Answer a set of questions that our team of researchers will ask you and we’ll write it for you


B) Write the newsletter yourself and we’ll edit it for you

If you think you have something worth sharing with over 35,000 weekly readers - fill out this typeform

(Only takes 2 minutes to fill out, so why not?)

To give you more context, there are 4 main reasons why we’re doing this:

A) We want to mix up the content and not always talk about Obvi and us

B) There are thousands of great operators/founders who just don’t have a platform to share their ideas. We want to give them one

C) Very few people can and/or want to commit to writing a weekly newsletter, but this will allow them to still share their thoughts and learnings

D) We believe you, the reader, will get more value from getting multiple perspectives and insights from different industries. The reason why you’re reading this is most likely to learn, and the best learning happens when you get multiple perspectives on a topic

Now, let’s get on with the newsletter.

Finance 101

Acing the finance side of your business is crucial in any industry

And instead of merely highlighting the lack of it, we at Obvi have decided to share actionable strategies you can implement quickly and efficiently. 

Our goal is to help you get up to speed on the best tactics for mastering your DTC finances,  

We want to spare you the pain we went through so you can avoid mistakes and scale faster, better, and more profitably than we did. 

Here are some of the most common mistakes that way too many DTC brands keep making: 

  • Mismanaging your margins 

You run a new sale, and ROAS shoots up, which, of course, makes you spend more. 

But - you didn’t adjust for the discount’s decreased margin. Leaving you with nothing but a ‘successful’ campaign and lost dollars.

  • Failure to identify and pivot on financial losses QUICKLY

If you don’t have the right structures in place, you could be overspending (specifically on ads) for weeks without catching it. 

The lost dollars stack up, and they stack up fast. 

  • Poor planning and chasing the wrong kind of growth

Having products that can’t sell (or sell too quickly without the backup inventory) are both major bleed areas for your financial health. 

And to make this even worse if you’re just chasing revenue OVER profit - you’re likely just growing at the expense of…

You guessed it. 

Your Money.

Without a rigorous forecasting process, on-hand inventory is out of whack with sales trends.

Look, we get it. 

Trying to understand your finances can be seriously intimidating. 

And learning them on your own can lead you down a long and painful road of trial and error. 

There's a quote that says "What gets measured gets managed". This is particularly true with regards to finances.

It doesn't matter what day it is, or what time of the day it is. You need to know and understand every line item in your P&L and cash flow statement in order to get through hard times (and also to grow faster in hard times).

Here are a few practical examples of how we do it: 

Negotiate with Advertising Platforms like Meta.

We started with a Net seven payment term, then a net 15, and now we have net 30

Then we'll pay this wire through a credit card that gives us another 30 days to pay.

Negotiate Shipping and Fulfilment Costs As You Grow.

Offer your manufacturer to pay them a little bit more if they give you better payment terms.

Cash is more valuable than debt right now. So although the rates are insane, it's actually as hard to go and find capital - if you blow it all away. Therefore, what we do is… 

Use Credit Lines

Use credit cards with good float.

Never rely on one credit card. Always change based on rate, terms, and float.

Use the just-in-time principle for inventory management. 

This means that just as we're about to run out of stock, a new inventory order will arrive - and therefore, we're never sitting on too much inventory.

There are many more things you can do on the finance end when it comes to timing billing cycles and using specific tools for specific purposes (ad spend, inventory, etc) - but that can be a newsletter of it'sits own.

The key takeaway is: 

Stress over finances -  particularly Cash Flow - and be creative in your approach to increasing your runway.

Do what you can to stay in the green and work like hell every day to optimize it just a few %. 

Now - before we get into the nitty-gritty of everything from the tools we use, new tools we incorporated as we scaled to 8 figures, forecasting, and P&L management…

Here’s a quick summary of what’s included, but be sure to download the full playbook at the end to take advantage of all the strategies and examples we shared. 

Daily Profit Tracking

We maintain a daily profit tracker via text messages sent by our analysts, detailing:

  • Revenue generated

  • Ad spend

  • Projected daily and monthly profit/loss (P/L)

  • Breakdown of revenue from new and returning customers

This system ensures total transparency, with no surprises about our financial standing.

Supply Chain and Inventory Forecasting

Initially, we used Google Sheets to manage supply chain and inventory forecasting. 

(More about the tools we grew into later) 

We exported orders from our Shopify store bi-weekly and utilized macro formulas to create SKU velocity reports. This allowed us to predict the number of units sold per dollar spent on ads, helping us to manage inventory and plan for future ad spend effectively.

Our inventory management relies on knowing our inventory on hand and understanding our lead times with factories. We place new orders based on these lead times and our projected sales.

Financial Forecasting

Our financial projection modeling, developed with the help of our fractional CFO from UpCounting, involves maintaining a 26-week cash window. 

We use Google Sheets to integrate data from various platforms like TripleWhale, Facebook, Google, and Shopify, allowing us to make informed assumptions about future revenue, ad efficiency, and spending.

We continually update our financial projections based on actual performance over the past 21 days, adjusting assumptions to maintain an accurate cash balance forecast.

Money in. Money out. 

Cash on hand.

Setting Up and Utilizing Your P/L

We use UpCounting for bookkeeping, ensuring our books are closed monthly.

UpCounting accesses our direct-to-consumer (DTC) and wholesale revenue through Shopify, while we manually provide data for retailers like Walmart and Rite Aid.

To ensure accurate P/L, we:

  • Pull invoices from SPS Commerce for retailers

  • Perform SKU velocity reports multiplied by COGS

  • Update inventory balances from our 3PL

After UpCounting creates a proforma P/L, our VP of Finance, Ravi, audits every transaction for accuracy before finalizing the P/L.

P/L Review and Expense Audit

Our CFO, Abir, reviews the P/L with upper management, discussing high-level performance and detailed metrics such as new customer ROAS and AOV. 

Concurrently, Ravi (Our VP of Finance) conducts an expense audit, examining each expense to identify cost-saving opportunities and updating our forecasted overhead based on these audits.

Effective Use of P/L Data

To maximize the utility of P/L data:

  • Break out revenue by merchant processor to understand customer payment preferences

  • Analyze costs as a percentage of revenue month-over-month to identify trends and impacts on efficiency and gross profits

  • Evaluate ad spend efficiency to ensure optimal revenue generation relative to overhead

The Brightflow Transition 

In the past, we used Google Sheets for everything. 

Now - a lot of founders are talking about Brightflow’s ability to predict potential issues and protect their liquidity,

So we figured “Why not?”

And let me tell you, we do not regret it in the slightest.

Brightflow AI has been incredible for us by bringing everything from multiple marketplaces into an intuitive, easy-to-use dashboard. 

All data sources are fed automatically, saving hours of manual work that we previously endured pulling data and consolidating reports. 

Now it’s so much easier to monitor our cash position in real time. 

How Can I Learn More?

Mastering your finances can’t be done in one newsletter. 

But - we made sure to compile some solid resources for you to start. 

Yes, it’s a lot. But, hopefully you understand just how important this is, and from today going forward make sure you at least understand and use the fundamentals to your advantage. 

The top 6 financial mistakes that too many e-commerce brands are making: Read Here

An in-depth guide to creating the “Perfect P&L”: Read Here and the “Perfect P&L template Here

How to learn AND understand the financial performance of any business: Read Here

Alright, enough about finance - Let’s talk about something that’s just a little more exciting for a moment.

Tool Of The Week

Building relationships is one of the core aspects of building a profitable business.

When we onboard new creators, we’re not looking for a quick turnaround on a couple of social media posts - we’re looking for long-term relationships.

And you might be asking yourself, 

“But why do I need to prioritize building long-term relationships with a handful of influencers when I can choose from thousands?” 

That’s problem #1. When you don’t approach your influencer marketing like a long-term investment in your brand - then your results are going to show it. 

But… building these relationships is (usually) a LOT easier said than done. 

Back in the early days of Obvi, we were hitting roadblock after roadblock trying to make this happen.

We had no system, no structure, and no way of guaranteeing that the creators we onboarded actually wanted that relationship with us.

We were wasting too much time doing this all manually, and when we finally brought on creators who did want that relationship… 

We were so caught up in the mess of our own ‘systems’ that we couldn’t give them the time or attention they deserved.

But bringing on SARAL turned EVERYTHING around - they streamlined and automated this entire process, centralizing everything we needed into one platform:

  • Influencer seeding/management 

  • A detailed, comprehensive list of creators/campaigns/UGC

  • In-depth reporting so we could see which relationships were actually working for us

  • And so much more

Now with SARAL, we can finally focus on building an army of creators without all the stress, time, and iffy results of doing it manually. 

If you’re looking to create an army of creators who genuinely care about your brand (without the weeks of time and effort) - then I’d definitely check them out.

Thanks For Reading Along

Financial literacy in business is not something that’s talked about as often as it should, but it’s absolutely necessary for EVERY founder to learn and comprehend the basics - at a minimum. 

By sharing our in-depth insights and our guide to mastering your finances, we hope that you can learn about what has worked well for us so that you can take these lessons and replicate the success in your own business. 

But with that being said, 

Click the link below to access your Financial Literacy Playbook.

Until next time,

Ron & Ash