The truth about debt
We know that the road of entrepreneurship is a lonely one, yes, we walk it every day too and we understand that feeling. And when you are starting out, one of the hardest questions to solve is: How do I get money to grow? How do I buy the oven I need, or more fabric, or more inventory for my business?
Generally, we all start in the same place: with money from our savings, with capital from a family member who has supported us and wants to see us grow, or with money borrowed from one of our friends. Everything seems perfect, until these resources start to dry up again, and sometimes, faster than we thought. Who do we turn to? Going back to friends sometimes is painful, and besides, not all of them are able to lend us more. Going back to family is not an option either. Who else can lend us money? How can we have capital to grow?
The search on the internet begins as well as the sleepless nights thinking that the zeros in the account are still decreasing while there are still some things missing to achieve all those sales. We hear in our head some grandparents, our school teachers and even friends who have told us thousands of times that getting into debt is not a good idea, that it generates future commitments, it stifles you, it limits you. Have you heard it too?
Well, if this is your case, it is time to break those myths and to really learn about indebtedness: having a debt can be positive or negative, depending on the use you make of the credit and the payment term you have foreseen for it. Let's take it one step at a time:
Cuando adquirimos una deuda para aumentar nuestros activos (o en palabras más cotidianas, para tener más recursos, maquinaria o insumos para producir) es positivo. Si estas inversiones, aumentan tus ventas, al final podrás cubrir las cuotas de tu crédito con la ganancia de las mismas y así aumentar tu productividad. Si por el contrario, utilizas el capital del crédito para darte gustos o mejorar temas que quizá pueden esperar un poco para tu negocio, podrá ser negativo.
Al adquirir un crédito, fíjate especialmente en el valor de cuota que tendrás que pagar de manera mensual. Si puedes cubrir la cuota con tus ingresos, ¡estás en el lugar correcto! Tu misma producción cubrirá la deuda y en menos de lo que te des cuenta el crédito ya se habrá pagado y tendrás todos los activos a tu servicio.
1. You build a credit history: even in the smallest credits, or with debit cards, you start to build a credit history which will enable you to access larger loans when you need them. Think of credit history as an invisible medal that you put on your business and that will be in your favor when you need it.
2. Improve your cash flow: it allows you to have expenses for your business that you would not otherwise be able to get.
3. Demonstrates your empowerment over the management of the business: a well-managed debt is the best demonstration that you know your business very well and that you can run it in the best conditions.
4. You no longer need your circle of friends and family: although they have been a great support, you will no longer have to resort to them to have capital to help you keep growing.
5. It helps you to boost your growth: a debt will allow you to increase your production, boost sales by trying new strategies (for example, by starting a dynamic advertising campaign on Facebook and Google to get more customers), have supplies to produce more, adapt a place to sell your products and, in short, sell more and have more income!