You could be in a trap wherein you keep on increasing your sales but your inventory also keeps on piling up. You may be making good profit on your sales but you never see it because it is stuck inside your inventory.
So, the best approach is to plan and forecast carefully how much you can confidently sell based on your market information and manage your risk in case you are unable to sell all your stocks.
How do you unload your unsold stocks and at how much? Where are you going to liquidate your slow moving stocks without affecting your brand? How much are you willing to cut your price without losing so much?
There is nothing wrong with borrowing money to support your working capital but make sure that you can repay this as soon as possible.
Henry Ong, CMC, CMA, is president and COO of Business Sense, a business advisory firm that provides expert solutions to small and medium sized companies. You may reach him at email@example.com.