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Inventory Is Gravity
Product founders often assume cash problems mean one of three things:
Pricing is wrong
Demand is weak
Discipline is lacking
But more often, none of those are true.
So far in this series, capital has mostly behaved like time.
Article 35 defined who carries the risk when money doesn’t exist.
Article 36 defined how much money buys you survival.
Article 37 defined how much capital buys you in learning and credibility.
Product businesses break this logic.
Once capital turns into inventory, it no longer buys time. It gets stuck.
Capital starts behaving like a weight.
Stage: Scaling → Operational Weight
Industry Lens: E-commerce / Physical Products
In service and software, revenue and cash often move close together.
In a product, money leaves long before it comes back.
So even when revenue looks strong, cash is trapped in motion.
In product businesses, capital’s job is:
To survive the delay between paying and getting paid back.
The Product Capital Math
This is where product founders stop guessing and start deciding.
The goal here is to answer:
Can my current capital support my growth plan?
Step 1: Measure the Delay
First, you need to know how long your cash will be unavailable before it comes back.
That’s the cash conversion cycle.
Cash Conversion Cycle (days) = Days Inventory Is Held + Days to Collect from Customers − Days to Pay SuppliersIn plain terms:
Inventory days → from when cash leaves your account to when the product sells
Collection days → how long customers take to pay you
Payable days → how long you delay paying suppliers
This number indicates how many days your cash is unavailable.
Step 2: Quantify Trapped Capital
Now turn time into dollars.
This is the number that usually surprises founders.
Ask: “How much cash is locked up before I see it again?”
Trapped Capital = Monthly Cost of Goods × (Cash Conversion Cycle ÷ 30)Example:
COGS: $40,000/month
Cash Conversion Cycle: 75-day cycle (~2.5 months)
👉 $100,000 trapped
It’s the cash you already spent that hasn’t made it back yet.
This is the weight inventory created.
Step 3: Who Carries the Weight
Once you know how much capital is trapped, you compare it to the capital you actually have available.
Ask one honest question:
Can this business afford to trap this much cash and still operate safely?
If $100k is trapped and you only have $150k total, growth is fragile.
If $100k is trapped and you have $500k available, growth is absorbable.
That’s what this number really tells you: how fast growth is financeable
In every product business, the weight lands somewhere.
The risk isn’t choosing wrong, it’s choosing accidentally.
Most founders carry it in one (or more) of four places:
The business → slower growth, smaller batches
The unit economics → higher costs for flexibility
The balance sheet → more capital to absorb the delay
The founder → stress, delayed pay, reactive decisions
There’s no correct answer.
What Healthy Looks Like
Healthy product businesses:
know how much cash is trapped
know who is carrying the weight
and revisit that decision as they grow
They don’t confuse stress with failure.
They recognize gravity and plan for it.
Community Note
Inventory doesn’t kill businesses.
Surprise does.
When founders understand where cash gets stuck, they stop blaming sales and start managing reality.
👉 Reply with:
A lesson inventory taught you the hard way
Or a cash gap you didn’t expect
Your story helps other founders recognize the gravity of the situation sooner.
We’re collecting real scenarios for the NestLedger Playbook so founders can learn from each other, not just from theory.
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