9 practical business principles I’ve learned: 1. You can lose money with bad inv
By Mikebeckhamsm · October 23, 2026 · Curated by George's Blog
9 practical business principles I’ve learned:
1. You can lose money with bad inventory buys more quickly than you can make it with sales.
2. The best way to reduce inventory risk is to reduce the latency in your supply chain.
The quicker you get a product, the less you have to model the distant future.
The further out you have to model, the worse the model gets.
3. Concentrate your purchasing with a small number of manufacturing partners. It will build relational capital and trust.
Partnership paves the way for lower prices, better payment terms, and other benefits.
There are risks to concentration, but diversification pitfalls are bigger.
4. The best items can always sell more than expected when supported with more inventory.
They are also the least risky because they are the easiest positions to reduce through discounting.
The top risk-adjusted path to growth is to increase the sales velocity of your best items.
5. Manufacturers offer discounts for higher order quantities. Don’t let it influence your decision-making.
The discount is rarely big enough to justify buying more of an item than you need.
6. Your products that are producing growth at scale should always eat first, even if it reduces the amount you can invest in new opportunities.
7. China never takes back inventory, even defective merchandise.
Shipments only go out; nothing goes back in.
Pay for a high-quality inspection before shipment!
8. If using debt to finance inventory, use a revolving credit facility with a borrowing base.
It creates healthy checks and balances on purchasing.
9. In mass retail, you will be encouraged to buy large amounts of inventory. Retailers hate out-of-stock products.
Tread carefully, and do your own forecasting.
When you buy at that scale, there is no safety net if things don’t work out.