Inventory that sits in your garage does not generate sales or profits; it generates losses that will shrink your bottom line in the form of:
- Debt service on loans to purchase the excess inventory.
- Additional personal property tax on unsold inventory.
- Increased insurance costs on the greater value of the inventory in stock.
To avoid accumulating excess inventory, establish a realistic safety margin and order only what you're sure you can sell.
Excerpted from Starting a Home-based Business