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Overstocking

Excess inventory creates extra overhead, and that costs you money.

Opinions expressed by Entrepreneur contributors are their own.

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

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