Lending and debt
In their book On Strategy, the Boston Consulting Group has collected their thinking and writing from decades of practice. One of their “maxims” is “use more debt than your competition or get out of the business.”
This fascinated me. Many of us have grown up thinking that debt is bad. We pay off the mortgage as quickly as we can; we’re penalized financially by credit cards for carrying debt too long, and yet, these business experts say that debt needs to be used more. It’s certainly food for thought!
The issue of debt, credit, and lending is a tricky one indeed. Many businesses do need to use debt to run their business and few of us want a lot of debt hanging over our heads. But some debt is necessary for business to run. Recently, I’ve heard of several businesses that are getting orders from customers but are finding it hard to meet those orders because they can’t get the loans to pay for raw materials or equipment to fund the production of their products! That’s a tough situation! It’s no wonder that many entrepreneurs pay for some business costs on their personal credit cards or against their home mortgages. It’s risky but what other choice do they have?
It is nice to see some organizations – like GoBIG Network to help small businesses connect with venture capitalists. This might be the best interim answer right now. I’m also interested to seek sites like kiva.org helping impoverished entrepreneurs around the world with funds to run their businesses. I wonder if there are similar “microfinance” opportunities here for North American businesses who need a small loan but can’t or don’t want to go through a traditional lender.
Tell me what you think! Do you NEED to use debt? Do you want to use more of your debt? Are you forced to use debt? How are you finding the lending practices of financial institutions today? Where are you getting money to run your business?
Jessica Routier, IAC-EZ
Jessica Routier
Jessica wants to talk to you! She is who coordinates the contests, travels to all the conferences, and interfaces on a fun level with customers on a daily basis in order to bring our users together as a community.
Jessica has a B.Admin and an MBA. Her background in business, along with a diverse skill-set (including a diploma in Medical Transportation, retail experience, and experience as a paralegal) make her a valued, highly flexible team member.
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