Read Millionaire Fastlane
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- May 29, 2012
This is actually a great question. Here is a lengthy article explaining what @biophase is talking about in detail.Good point. If you're constantly leveraging to put up with demand, how do you know if you're overextending? It seems like at those numbers the risks are so huge.
How Fast Can Your Company Afford to Grow?
You can absolutely grow too fast and back yourself into a hole with no cash. People who know the ecommerce game know this well. It's very important to manage your growth and cash.
I'm also a very FIRM believer in taking cash off the table as soon as is realistically possible, particularly if you don't have much personal savings. At some point, your business NEEDs to be profitable to be worth anything, and you SHOULD be taking profits off the table in MOST cases.
I'm very fortunate that I only deal with US Suppliers in my current business, and my lead times are very short. My cash churn is very low compared to the volume we do. This has allowed for quick growth and for being highly profitable at the same time.
I've invested in another business importing from China, and while it has gone well, getting things from overseas eats cash. Be prepared for it!
Great insight @biophase
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