Being a relatively conservative society, we definitely don’t associate borrowing money in business with positive vibes. We don’t even associate starting a business with positive vibes. You should know that raising some money for a business doesn’t necessarily involve rescuing it from a fix. Three circumstances prove this true:
Increased demand
In 2016, at the launch of the SheTrades initiative, it was revealed that opportunities do come to women entrepreneurs in Kenya but usually they are not ready to take them. Kenyan women were therefore advised to ever be learning about their trade and to collaborate with other women. What am I getting at? You may receive that big order or find yourself in a position where you’re overwhelmed with clients. In such situations it is prudent to borrow money in order to augment your capability and avoid problems of poor delivery and surrendering opportunities to expand.
Capital expenditure
It sucks to be told that you need to do stuff like buying second hand furniture and equipments, for your new business, to save money. So when the time comes to increase productivity with a new set of purchases you could lose your way a little. Some entrepreneurs compromise cash flow by diverting working capital for these capital expenditures. Are you one of them? It’s always going to be better to borrow money to generate more value than the interest payment. Borrowing also leads to better returns than using your own money.
Declining Revenue
You are one heck of a strategic manager. So, I presume you would anticipate periods of low revenue. Don’t wait for the consequences that come with. Like cash flow problems. Instead, you could set your contingency plans in motion. You can actually hedge against declining revenue by borrowing. No, it’s not idle money. You and I know that businesses cannot have idle money; they’re always on the brink.
