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Cash…debt….2014????????????????

This evening I had a long conversation with a friend over the best way to plan for 2014. The main topic of conversation was the taking on of additional debt to grow a business.

As a strong advocate for small business growth I encourage taking on risk (debt) but with careful planning in several areas:

  • First and foremost have a one-year strategic plan with accountability checks at least once a month. This plan is to be approved by your business support group and developed with the help of your business coach.
  • Next is the need for a cash reserve to operate the business if there is no income for six months. If the plan receives your whole hearted support and is endorsed by your coach and or business support group, then it should work if properly implemented and the accountability factor is followed. The reserve fund can come from the business’s own cash reserves or from debt that is secured to launch the next growth phase.

The conversation continued with another question, “What if I want to fund it from future income generated by new growth?” I could tell that a decision was almost made by my friend’s own “gut feeling”. The current business was making enough to break even, but not enough to show a profit.

Business discussions in a social setting are difficult; and if several glasses of wine are involved, it becomes almost impossible. I left my friend by offering to take a look at his current business structure and to share my growth suggestions at the end of my internal review of his business. I only hope that he takes me up on my offer. So many hasty and uncalculated business decisions are made at this time of the year based only on a rush of adrenalin.

My suggestion for myself and my clients is to take one small step every day and to focus on two important business necessities: budget control and marketing.

I am optimistic about 2014, but please hedge your bet with a carefully planned budget and  a cash reserve.

Whether you are a success or failure in life has little to do with your circumstances; it has much to do with your choices.     Nido Qubein

Nick J. Petra CFP   one clear choice should be a subscription to www.onebizcentral.com  if you can’t afford $60 to grow your business it may be time to regroup.

 

 

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