Why heavy inventory kills small businesses

Author

Kon
May 15, 2025

Had breakfast with my friend this morning. A polished operator in the car industry - sells used BMWs from his house.

His business model is like this:  

  • Only deal with RM30k-40k BMWs

  • Stock about dozen cars only

  • Park all at his house (no shop lot)

  • Advertise on Facebook + car clubs

  • Zero rental, zero staff cost

Coming from my experience. That sounded like a smart way to do business. But even with such a lean setup, he was still sitting on RM500k worth of inventory.

And these cars?  

  • No guarantee when you will sell them

  • Depreciating every day

  • Each one only profit RM3k-5k

The good thing is that this friend of mine is very skilled at what he does:  

  • Very good at negotiating buying price

  • Know how to get good selling price

  • Clever to jaga his customers, keeps them loyal

  • Have partners to help with processes

But my conversation with him reinforced the lessons I learned from my own business journey. The traditional way of doing business is like wearing golden handcuffs.

Even when you try to be clever about it (like my friend), you still end up with:  

  • Big money stuck in inventory

  • Daily pressure to sell

  • Limited ability to pivot

  • Work stop, income stop

If you're just starting out, you want to focus on:  

  • Building solid client base

  • Serving customers properly

  • Improving your systems

  • Testing what works

But how to do all that when you're busy:  

  • Counting inventory

  • Paying rent

  • Managing staff

  • Fighting fires everyday

  • Just trying to survive

I learned this lesson the hard way with my previous business. Every extra overhead you take on is like adding another chain to your leg. Which is why I'm very passionate about helping other aspiring entrepreneurs avoid the same pain.

Got a business idea? I've created a framework to validate your plan:  

  • how much you need to start

  • how much you need to keep the lights on

  • how to make sure you don't bankrupt if the business fails

Reply "FREEDOM" and I'll share more details.

Always cheering you on,

Kon

P.S. The traditional business model worked great in the 90s. But in 2025? There are smarter ways to build.