The Money Sitting on Your Shelves
By OSJJ
Open Source Jiu-Jitsu
The Money Sitting on Your Shelves
What inventory tracking is, why running out and over-buying are the same mistake, and the monthly count that ties your shelves to your bank account.
What inventory tracking actually is
Inventory tracking is a record of what you own, what it cost you, what it sells for, how many are left, and the number at which you reorder. That is all. It is not accounting and it is not a system you have to learn. It is a count and a threshold, kept current.
What makes it worth doing well is that the things on your shelves are not really objects. They are cash. Every gi in the back room is money that already left your bank account and has not come back yet. Inventory is the one asset in the academy that sits in between being money and being money again, and the only thing that tells you which direction it is heading is a record.
Three kinds of things live on those shelves, and they behave differently enough that lumping them together is the first mistake. Retail and apparel, meaning gis, rash guards, spats, shorts, and branded shirts, is a profit center you actively manage. Consumables, meaning mat cleaner, disinfectant, first aid supplies, and paper goods, are an operating cost you simply cannot run out of. Belts and stripes are the hybrid: they are not sold the way a shirt is, but running out of them has a consequence a shirt never will.
Why this matters, in two directions at once
Inventory is unusual because it fails in two opposite directions, and most owners only fear one of them.
The first is the stockout, and it costs you revenue you already earned. A new white belt who decides they want a gi will very often buy it right now, standing in your lobby, while they are still excited. That is not a considered purchase. It is an impulse attached to a feeling, and the feeling does not wait for your reorder. If you do not have their size, it goes to Amazon that night, and you have lost a sale you had already done all the work to create. Running out of A1 and A2 is not a small inconvenience, because those are the sizes that sell, which is exactly why they are the ones you run out of.
The second failure is the opposite, and it is quieter. Every unsold item is cash you cannot use. Over-ordering feels responsible, because a full shelf feels like preparedness. But a shelf of sizes nobody buys is money you could have put into marketing, into staff, into the reserve that carries you through a slow month. It is not preparedness. It is capital you converted into objects and cannot convert back.
Tracking is what lets you sit between those two failures instead of lurching between them. Without it, you are guessing in both directions at the same time.
Then there are the belts, which make their own case. Few things undercut a moment on the mat like getting to testing day and realizing you are out of purple belts. That is the biggest day of the year for that student, and you have turned it into an apology. It is entirely preventable with a count and one question asked a week early, which is what makes it such an unnecessary way to fail.
And the consumables are a liability question rather than a revenue one. Running out of mat disinfectant is not an errand you forgot. It is a health issue in a room where people put their faces on the floor.
The test
Answer these without checking anything.
• What is the total dollar value of what is sitting on your shelves right now?
• How many A2 gis do you have?
• Do you have enough belts, in the right colors and sizes, for your next promotion?
• Last month, did the drop in your inventory match the items you sold?
• Which item has not moved in sixty days?
• If a gi went missing, would you ever find out?
If those are guesses, the shelves are holding an unknown amount of your money in an unknown state.
The framework
• Separate the three categories. Retail, gear and belts, consumables. Track them in the same log but never manage them the same way. Retail you optimize for profit. Belts you optimize for never running out. Consumables you optimize for never having to think about.
• Record the fields that make decisions, not the fields that look thorough. For each item: what it is, its category, what it cost you including shipping, what it sells for, how many are on hand, the reorder threshold, how many to order when it trips, the supplier, and where it physically lives. The two people skip are the reorder threshold and the true landed cost, and those are the two that actually change what you do.
• Count it when it arrives, before it goes on the shelf. Count against the packing slip while the box is still open. A short or damaged shipment is the supplier's problem on the day it arrives and your problem a month later. Update the count the same day and file the invoice.
• Log every sale and every giveaway. The sale is obvious. The giveaway is the one that matters. Every belt handed out at a promotion, every loaner gi, every comped rash guard comes off the count with a name and a reason attached. This single habit is what separates real shrinkage from your own generosity, and without it the two are indistinguishable forever. This is inventory's version of tracking the cash that leaves the drawer: the money going out is the half everyone forgets, and it is the half that makes the numbers lie.
• Spot check weekly, count fully monthly. Once a week, eyeball the fast movers: common gi sizes, popular shirt sizes, belts. Once a month, count everything and reconcile it against the log. Write down what is missing and your honest best guess at why. Sign it and date it. An audit nobody signs is a chore, not a control.
• Let the threshold do the remembering. When an item hits its reorder number, the log should flag it on its own, whether that is conditional formatting in a spreadsheet or an alert in your member management system. Review the flags on a set day each week and order. Order ahead of the spikes you can see coming: testing days, seminars, a new student push.
• Give belts their own discipline. Keep a dedicated count by color and size. Before any promotion, the head instructor confirms there is enough stock for the expected number of students. Keep buffer stock of stripes at all times, at least a full pack per color. Stripes are cheap, and running out of them is not.
• Handle damaged and returned items on purpose. Pull damaged goods from sellable stock the moment you find them and log them as written off, with a reason, so they do not read as shrinkage later. Inspect returns before they go back on the shelf. Repurpose what you can, a torn rash guard becomes loaner gear, and note the change. The gray zone between sellable and gone is where inventory quietly stops matching reality.
• Tie it to the bank. This is the step almost nobody does, and it is the one that makes all the others true. At month end, the drop in your inventory should match what you sold, by quantity. Your sales report should match the money that landed in your bank and the number on your profit and loss statement. When those three agree, your records are real. When they do not, you have found something.
What the monthly reconciliation actually looks like
That last step is the whole game, so here is one month of a single item, start to finish. Take white A2 gis. You begin the month with twelve on hand, each costing you sixty dollars and selling for one hundred forty.
Line | Units | Where it comes from |
On hand, start of month | 12 | Last month’s closing count |
Received | +6 | One shipment, counted at the box |
Sold | -9 | Nine sales logged at the counter |
Given out | -1 | One loaner logged with a name |
Expected on hand | 8 | Start plus received, minus out |
Actual counted | 7 | Physical count at month end |
Shrinkage | 1 | Expected minus actual |
One gi is unaccounted for. Because the giveaway was logged, you already know it is not the loaner. So it is a real miss: a sale rung up without deducting stock, a gi walked off, or a miscount somewhere. One unit is not a crisis, but it is a specific question rather than a vague unease, and you answer it now while the trail is warm instead of discovering a hole of unknown size at tax time.
Then the second half, the part that catches errors the count alone cannot. Nine gis sold at one hundred forty is one thousand two hundred sixty dollars in gi sales. That number should appear in your sales report, that money should have landed in your bank, and that figure should sit on your profit and loss statement. If your books show a thousand dollars of gi sales and you sold nine, something is priced wrong, discounted without a note, or not making it into the deposit. The shelf, the sales report, and the bank are three witnesses to the same month. When they disagree, one of them is lying, and the disagreement is the whole point of doing this.
Reading the shrinkage when it does not match
A single missing unit is an incident. A pattern is information. Once you have a few months of audits, the shape of the misses tells you more than any one miss ever could.
What you see | What it usually means |
One unit off, then clean for months | A one-time miscount or a single unlogged sale. Note it and move on. |
The same fast-mover always short | Sales are not being deducted at the counter, or the giveaways are not being logged. A process gap, not a thief. |
Shrinkage only in small, easy-to-pocket items | Rash guards and shirts walking while gis stay put points at actual loss. Tighten how the floor stock is watched. |
Inventory value climbing, sales flat | You are over-ordering. Cash is turning into shelf, in exactly the sizes that do not move. |
Items untouched for sixty days | Not shrinkage, but dead money. Discount it, bundle it, or stop carrying it, and put the cash somewhere that moves. |
None of this is visible without the monthly count and the logged giveaways behind it. Skip either one and every number becomes a guess wearing a decimal point.
Where it goes wrong
• No log of loaner or issued gear, which makes real shrinkage and legitimate giveaways permanently indistinguishable. This is the most common reason shrinkage looks worse than it is.
• Updating from memory instead of at the moment, which is the leading cause of inventory drift and feels like efficiency the whole time it is happening.
• No reorder threshold, which guarantees you find out you are out of A2 gis when a student is standing at the counter holding one.
• One person holding all of it in their head, so the system leaves when they do.
• Skipping the monthly count because nothing seems wrong. Nothing seeming wrong is exactly what a slow leak looks like from the outside.
• Counting the shelf but never tying it to sales and the bank, which produces a tidy number that proves nothing.
The bottom line
The shelves are holding cash you already spent. It turns back into money only if you sell it, and it only sells if the right thing is there when someone wants it. Too little and you lose the sale to Amazon. Too much and you have buried your working capital in sizes nobody buys.
Count it when it arrives. Log it when it leaves, including when it leaves for free. Set the number that tells you to reorder before you are out. Once a month, make the shelf, the sales report, and the bank tell the same story. That is the entire system, and it is the difference between a pro shop that makes money and a closet that quietly holds it.
Open Source Jiu-Jitsu
Open Minds. Open Mats. Open Source.