Written By: Alex Glassey, www.AlexGlassey.com
49.3% of small business owners said that their business did not have enough money, according to my most recent survey.
In today’s world of inexpensive debt, the solution seems simple enough: Why not borrow it?
Like any powerful tool, business debt is a good news, bad news story. The good news is that properly used debt supports your business and speeds its growth. The bad news is that, used unwisely, debt can constrain or kill your business and even hurt you personally.
Business debt is a product like any other: the bank is simply selling you money. And like any product, it is tailored for specific uses in specific ways:
The wise business owner knows this and uses debt deliberately and appropriately. She is guided by these three principles:
Finally, while not directly related to business loans, it’s a great idea to practice sound cash management habits like daily cash reconciliations and monthly financial statement reviews. These disciplines help you understand how a loan will affect your business. They actually make it easier to obtain a loan. And they help you track the on-going health of any loan you do get.
If you treat business loans like I treat my 10” chef’s knife, you’ll do just fine. My knife is a very useful tool and I treat it with a healthy dose of respect.
For more tools around financial planning, visit the Futurpreneur Business Resource Centre here.