It is thrilling to help your business by taking a healthy look at debt. Often entrepreneurs are afraid of debt. This fear of debt can prevent entrepreneurs from growing their businesses as they should. However, once an entrepreneur has a healthy understanding of debt and its place in business, there is opportunity for growth. It is important to understand that every business has debt. Business debt includes all of the following items:
- employee,payroll and employee related taxes
- supply costs
- association and membership fees
- website associated costs
Debt need not be the enemy of business operations and entrepreneurs. In fact certain debt can be thought of as a good thing. For example, every day that an employee works, that employee is owed a debt by the business, a paycheck. It is good to have employees, to provide jobs and be part of helping the American economy to grow. Employee payroll associated debt can be thought of as good debt. This is not the type of debt that normally scares entrepreneurs. The debt that normally scares entrepreneurs is loans. However, a loan is sometimes needed in order to finance items needed for business operations.
Before becoming indebted for any thing, large or small, it is important for an entrepreneur to look at several factors to make sure the business will be able to manage the debt. For example, a business that wants a loan to purchase new computer equipment should look at the following factors:
- current expenses
- cash flow
- profit and loss statement
- accounts payable
- accounts receivable
- purpose of the loan
- Projected return to be had on loan funds
In conclusion, in order for a business to be healthy, an entrepreneur must get a healthy attitude and understanding of debt. An entrepreneur must learn to manage debt adequately, correctly and without fear. So, the question for you this thrilling day is, how to you control debt in your business?