When faced with difficult situations involving the cash your business needs, it can be easy to think that finding new money to put into your business will solve your problems. Rarely does new money going into a business fix anything if there isn’t a specific plan for how it will be used and how it will be repaid. There are very few things in life that are free and taking money into your business without knowing how your business will use it and repay it will end up costing you more than the interest rate or the terms that the money comes with.
There are times when your business should consider taking money from third parties like investors, bankers, friends, family, etc. and this is usually when the plan for repayment is obvious or proven. If you have a list of customers that owe you money for products or services you have sold to them, borrowing some money against that list might make sense. The real challenge becomes needing money and not having understood why your business needs it, and more importantly, not having a plan for how it will repay it. It seems simple enough to take money if you can find it and hope everything works out – but seasoned entrepreneurs and business owners know that strategy only ends in catastrophe.
Do you think your business needs money? Are you sure? Could it be that you may need to revisit what is going on in your business and spend some time figuring out what it really needs? Money can facilitate results but it is not the result. What results does your business need right now and how could money help…specifically?