I Refused to Borrow Cash for My Enterprise. Altering My Thoughts Is How I Constructed a Multi
I Refused to Borrow Money for My Business. Changing My Mind Is How I Built a Multi-Million Dollar Exit
How a simple line of credit smoothed service cash flow, funded expansion, and eventually delivered an acquisition price impossible on personal savings.
EXPERT OPINION BY CHRISTINE SLOCUMB, ENTREPRENEUR AND ADVISOR
Most founders have a complex relationship with other people’s money. They sign a six- or seven-figure mortgage without hesitation, but balk at getting a business loan to bring on more reness credit
I was one of those in the early days of my business. Then, I learned the power of using other people’s money, first with a line of credit that let me smooth out the typical cash flow fluctuations of a services business. Then ultimately I sold to take the business to a revenue level that I could not. Here’s what to know about using business loans the right way.
Money Is Here To Support Your Dreams, So Use It
Founders treat business debt as scarier than personal debt, but it’s actually safer. It’s underwritten by the business’s cash flow, not your paycheck. And banks and other financial institutions will look at every detail of your business under a microscope before signing off on a loan, so there’s little risk if you have solid bookkeeping and positive historical cash flow numbers.
Three Common Instruments: What Other People’s Money Looks Like
Once you’re comfortable with the idea, there are three popular ways to access other people’s money.
The daily digest for entrepreneurs and business leaders
Lines of credit and bridge loans smooth out your cash flow. A line of credit covers payroll during a slow month or lets you bring on additional rent lands, without touching your personal savings.
A bridge loan does the same job for a specific, time-bound gap, like the stretch between signing a new client and collecting on the first invoice
Growth loans enable you to go on offense. This capital funds significant expansion, such as acquiring a competitor or building an AI-powered platform.
Selling your company is the ultimate use of other people’s money. A buyer, often backed by investors or private equity, hands you a check based on the future cash flow your business will generate for them. You cash out on the value you built, funded by someone else’s capital and someone else’s confidence for the future.
Source: www.inc.com
