Why Every Businessman Have a Debt?
Back in college, I had a marketing class which required me and my group to create a business plan. By doing that business plan, I realized one thing that it took a lot of money to start a national level company that could make tons of money every year. I wondered how a real businessman affords that.
In some occasion, I asked my professor about this, I asked ‘do the entire businessman have debt? Isn’t too risky to run the business to run a business that way?’ Then my professor explained that, if you want to grow your business faster, you need to use somebody else money. Here was his analogy:
Suppose you want to use your own money, let say you have $5,000 and each month you can make $500. So in a year, you can make only $1,000!
But what if you take some loan from creditors, let say you take $50,000 and the interest rate is 8%. Each month you can make $6,000 (because you have lot of initial capital), so in a year you can make $72,000. This way you can make $18,000 in a year using other people money! That’s why every businessman love to take more loans! Do you get the point know?
The thing is you need to manage your debt well. Debt management is so crucial, you have to manage it from the very beginning, but if you need help, I think you can use the service from Baines & Ernst to manage your debt! Good luck!
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