Too much of a good thing? How to avoid the curse of overtrading
When running an SME, every order can feel like a blessing, and in the current economic climate, a sudden surge in demand may seem too good to refuse.
However, while an increase in popularity may make it seem as if all Christmases have come at once, it can actually cause more harm than good if the business isn’t able to trade effectively due to a lack of funds.
When a business takes on more than it can handle, this is known as overtrading.
Overtrading can be extremely stressful for budding businesses and it can see their finances drastically overstretched. The quality of products and services can suffer and customers can be left wondering why standards have fallen.
Running out of cash and resources can be extremely damaging for SMEs, but most businesses suffer from the problem at one time or another. The good news is that overtrading can be avoided – if you know how.
