Is three inventory turns a year on staging furniture a business?
Trying to understand staging as something to put money into rather than something to buy, and the whole thing seems to live or die on inventory turns. Here's the model I built and I suspect it's optimistic in a way I can't see.
Assume a vacant package for a 1,700 square foot house at $14,000 of inventory at cost, sourced from a mix of clearance and trade accounts. Charge $3,600 for a 60 day first period plus $650 a month after. At three turns a year with an average engagement of 75 days, that package grosses roughly $11,500 a year against $14,000 of capital, before any labor or overhead.
Against that: 2,000 square feet of warehouse at $1.10 per foot per month is $2,200 monthly, a box truck all in around $900 a month, two installers at $22 an hour for about 16 hours install and 6 hours de-stage per job. Say $500 of labor a job before payroll burden. That warehouse and truck have to be spread across however many packages I can keep in motion.
The parts I don't trust. First, three turns assumes almost no gap between jobs, and gaps are the whole risk since inventory sitting in the warehouse earns zero and still pays rent. Second, replacement cycle. A sofa that has been installed and de-staged eight times is not sellable as staging inventory anymore, so what's the realistic write-off period, four years? Six? Third, damage and loss rates on items that live in vacant houses with lockboxes on them.
Anyone who has run inventory at scale: what percentage of the year does a package actually need to be out on a job for the math to work, and does the answer change if a meaningful share of the book is flipper work with predictable timing versus one-off sellers with unpredictable timing? I'd rather be corrected now than after the second truck.