I’m continually amazed at how small business owners borrow against their family home and then think they have CASH to spend in the business.
If you have borrowed money or have a form of borrowing in your business then you are using other people’s money in your business and not your own.
The fact is that to get started most small business owners have some sort of borrowing because just like buying a house it is difficult to save up enough money to launch a business from your own money.
So to get started it is simply a matter of taking a loan against the family and ‘hey presto’ you’re in business.
BUT unless you believe you’re using other people’s money which needs to be paid back you can get further and further into debt without quite realising it.
The fastest way out of debt is a strong cash flow in your business.
The fastest way to get into trouble is to forget about your borrowings and fail to produce good cash flow.
I’m not talking about profit because it is possible to make profit and still have bad cash flow.
There are lots of resources on cash flow available but if you would like an introduction then go to our series of teaching on this and educate yourself before finding the bank breathing down your neck.
