My business needs inventory for christmas should I use my credit?
I own a small online business and sell on one of the big marketplace websites and I want to get as much new inventory as I can to sell during christmas but am low on cash, but I do have a line of credit for my business and am thinking that if I use that credit to buy new inventory for christmas I can just pay it all off in one payment after christmas. Is this a good idea or should I just wait until I get more cash and have less inventory to sell? And the way my business works is everything I buy I sell within a week, it's a very fast turnaround.
My thinking is this lets say I have $5000 in cash for new inventory for christmas and off of that $5000 I make $2000 profit. but if I use my line of credit and I will have $10,000 in inventory and I'll have $4000 in profit and then I just pay off the entire credit bill in one payment so I don't incur interest, So really I got that $5000 for free because in the end it cost me nothing because I immediately paid it off.
- JohnLv 78 years agoFavorite Answer
That's what a line of credit is for. Use it wisely.
- A HunchLv 78 years ago
"Christmas" is 5 business days away including today (aka Black Friday). when is the inventory even going to arrive...
I know there is 5 weeks of shopping between Thanksgiving and XMas, but if you aren't prepared on day #1, I think you missed it....
I'd do better planning and do this at some other point in time.
- Anonymous8 years ago
You are leaving out a key ingredient: "risk". If you are willing to take the risk that you won't be able to sell your extra inventory then yes. If not willing to face the consequences if you cannot clear your inventory, then no. Risk and reward, young son.Source(s): Business man from tampa