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Forum nameFinancial Feast
Topic subjectRE: Looking for money sources
Topic URLhttps://www.businessownersideacafe.com/forums/dcboard.php?az=show_topic&forum=105&topic_id=656&mesg_id=683
683, RE: Looking for money sources
Posted by Phanntom, Fri Jan-30-09 08:38 AM
Ralph...
A very cogent post. I'm personally against debt financing and refuse to do it in my own business outside of internal financing, which I would be the first to admit has probably caused my company to be smaller than if I'd been willing to leverage everything.

I take a much simpler, pragmatic view. If I'm financing my inventory it can cause me to become sloppy in establishing the proper levels, and I'm adding that cost of financing to my direct cost of product thereby making me less competitive.

About the only thing I'll consider financing is a producing asset...an asset that produces revenue...not a company car, that only produces smog, but a new piece of equipment to add a new product to the line. Tradionally, I try to make sure I can pay off any new asset within 6-months...then, I'll loan the company the money to keep from stressing cashflow.

I know my methods are antiquated, but they work and keep my stress levels to a minimum. We're in a terrible economy and I'm not worried about having to lay people off, or paying off debt...for my company, it's just another year. Anytime I lecture, I try to get this message across...debt, is not your friend...now, all of a sudden, people are figuring that out, both in their personal lives and their business lives.
I think your post was right on...
Denny