Most businesses fail due to a lack of cash flow, not just small businesses. Sometimes the problem is rapid growth, sometimes the problem is poor profitability but mostly, with a small business, it's just poor account collection procedures.
The skinnier your margins the more important your ability to get paid becomes.
When it comes to inventory it is important to clear anything which isn't moving. You are always better off having $50 back for a $100 item than having the whole $100 sitting on the shelf losing value.
Incidentally, if you sell an item below cost you can claim the loss on your tax, if you give it away you can claim the cost as either advertising or charitable giving.
Expert offers business advice during recession
Most businesses fail due to a lack of cash flow, not just small businesses. Sometimes the problem is rapid growth, sometimes the problem is poor profitability but mostly, with a small business, it's just poor account collection procedures.
The skinnier your margins the more important your ability to get paid becomes.
When it comes to inventory it is important to clear anything which isn't moving. You are always better off having $50 back for a $100 item than having the whole $100 sitting on the shelf losing value.
Incidentally, if you sell an item below cost you can claim the loss on your tax, if you give it away you can claim the cost as either advertising or charitable giving.
Brent
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February 26, 2009 at 11:03 p.m. ( permalink | suggest removal )