My Candle Business Is Growing but All My Cash Keeps Going Back into Wax, Fragrance Oils and Jars — How Much Raw-Material Inventory Should I Actually Hold?

The four formulas

Most small candle businesses decide how much to buy by looking at the shelf and guessing. That works at 30 candles a month. It fails at 200, because the shelf now holds tens of thousands of rupees and the gaps are in the one material you did not look at. The four formulas below replace the guess. They are the same four every stock-holding business uses, and they work for a kilo of wax as well as a carton of jars.

Two definitions matter before any arithmetic. Daily usage is monthly usage divided by 30. Use calendar days for consistency with lead times quoted in days; if you only produce five days a week, the arithmetic still works as long as lead time is counted the same way. Lead time is the time from deciding to order to having usable material on your bench. That includes the day you place the order, dispatch, transit, and the time it takes you to unpack and check it. It is your own number, measured from your own last few orders. We do not publish delivery times on this page, and the 7 days used below is an example only.

The fifth number, cash tied up, follows from the others. At any moment it is stock on hand multiplied by what you paid. Across a month it averages roughly the safety stock plus half of one order, because stock falls steadily from the maximum to the safety line and then jumps back. That single fact explains why smaller, more frequent orders free cash: halve the order and you halve the half-order sitting on your shelf.

One 200-candle month, priced

Here is the worked example used across this hub. It is a reader's month, not a recommendation: 200 container candles of 200 g at an 8% fragrance load, which is 16 g of oil and 184 g of wax each. Wax is Luxury Soy Wax Chunks at ₹599.00 a kilo, rated up to 13% fragrance load by the wax maker. Each candle takes one Eco Candle Wicks Thin C1 at ₹5.90 and one White Matte Glass Jar at ₹70.80. Six scents share the 3.2 kg of oil a month, each priced at its 100 g rate:

That is ₹267.05 of material per candle, before labour, packaging, freight and GST. It is also ₹1,780.34 of material consumed every calendar day, which is the number to hold in your head for everything that follows. Every day of stock you keep costs ₹1,780.34 of cash that is not in your bank. Every extra week costs ₹12,462.37.

Notice where the money sits. Wax and jars together are 67.8% of the monthly bill and move at exactly the rate you pour. Fragrance is 30.0%, but it is split across six bottles that each run at a different speed. That split is why one inventory rule cannot fit every material, and why separate reorder levels for fast and slow scents get a post of their own.

Three buying policies, one cash number

Hold the month constant and change only how often you buy. Keep 7 days of safety stock throughout, and treat every material the same for now. Days of cover convert to rupees at the daily rate above:

Moving from three-month buying to monthly buying frees ₹53,410.14 of average cash, without changing a single candle you make. Moving to fortnightly frees another ₹13,352.54. That is the cash a growing business is usually looking for when it says the money keeps going back into materials. It has not gone into materials you need. It has gone into materials you will need in November.

Frequent ordering has its own costs, and they are real. Each order may carry a shipping charge, and each one costs you time to place, receive and check. Those are your figures, not ours: put them next to the cash freed and see which is larger. I'm Paying Shipping Separately Every Time I Reorder Small Quantities — How Do I Calculate Whether Larger Raw-Material Orders Would Actually be Cheaper? works out when consolidating small orders is cheaper, and Should I Keep More Money in Cash or Use It to Buy Larger Quantities of Candle Raw Materials at Better Prices? compares keeping cash against buying larger quantities, including the few CSI lines where a bigger pack really is cheaper per unit.

Different materials, different targets

The policies above treated every material the same. In practice they should not be, because each material has a different usage rate, pack size, price break and risk if it runs out. Here are the reorder points for the same month with a 7-day example lead time and 7 days of safety stock, so each reorder point is 14 days of usage:

Three of the four materials stop the whole business if they run out, so they deserve the most careful reorder points. A single oil stops one scent, which is painful but survivable. Wicks are cheap and small, so over-holding them costs almost nothing: a 1,000-pack is ₹5,900.00 and would last this business five months. Jars are the opposite: ₹14,160.00 a month, bulky, and fragile. The same logic runs through every post in this cluster. Which materials get priority when cash is short ranks them properly.

Weeks of cover shows the imbalance in a single glance. Say you have 25 kg of wax, a 1 kg bottle of Lavender and a 1 kg bottle of Roasted Coffee on the shelf. The wax covers 2.9 weeks. The Lavender covers 5.4 weeks. The Roasted Coffee, at 10% of candles, covers 13.4 weeks, well over four months. The same pack size gives wildly different cover depending on how fast the scent sells. That is how a business ends up short of wax while holding months of a slow oil. I'm Running Out of One Raw Material While Having Months of Another — How Do I Synchronise Wax, Fragrance, Wick and Jar Purchasing with Actual Production? deals with synchronising the four materials so they run out together, not one at a time.

Setting it up in an afternoon

The system does not need software. A notebook page per material, or one sheet with a row each, holds everything: daily usage, lead time, safety stock, reorder point, order quantity, and today's stock. Update stock after each pour day. When a line drops to its reorder point, order that line. Everything else waits.

Three habits make it work. First, count in the unit you buy: kilos of wax, grams of each oil, packs of jars. Second, round order quantities to whole packs, but round the reorder point up, never down. Third, recalculate monthly while you are growing. A reorder point set at 100 candles a month is too low at 200, and growth is exactly when stale reorder points cause stock-outs. I'm Growing Quickly but Don't Want to Run Out of Wax — How Do I Set a Reorder Point Based on Monthly Consumption and Supplier Lead Time? shows how to set reorder points on next month's usage, not last month's.

Where the cash really goes

Here is a common snapshot, priced at CSI's listed rates: three months of wax, wicks and jars bought at once, and a 1 kg bottle of each of twelve oils because the kilo "felt cheaper". Wax ₹66,129.60, wicks ₹3,540.00, jars ₹42,480.00, and twelve kilos of mid-priced oils ₹55,170.60. Total ₹1,67,320.20 on the shelf, for a business that consumes ₹53,410.14 a month. The right-sized system above holds ₹39,167.44 on average.

The carrying rate is an example, not a fact about your business. It stands for whatever your money costs you: a loan's interest, the return you give up, or simply the orders you cannot fund. At the example 18% a year, over-holding costs ₹1,922.29 a month in money alone, before any oil goes stale or any scent stops selling. The bigger cost is usually the one that does not show in a table: the new jar or the corporate order you could not say yes to because the cash was on the shelf.

Cash also leaves before it returns in ways that have nothing to do with stock levels: finished candles curing on a rack, stock at a stockist on sale-or-return, marketplace payouts on a delay. Those are part of your cash cycle too, but they are not raw-material decisions. Keep this page's discipline on the raw side and you have one less leak to find. I Want to Grow from 500 to 2,000 Candles per Month — How Much Working Capital Will I Need Just for Raw-Material Inventory? puts a working-capital number on growth from 500 to 2,000 candles a month.

If you want a second pair of eyes on your numbers, send your monthly usage by material and your usual order pattern on WhatsApp. We will tell you which lines have a real pack break on our listed prices and which do not, and quote anything beyond the listed packs. No volume discount figure is published, so we will not promise one before we see the order.

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