You Don't Need Debt
Goly says something about growing her business that Dave seriously doesn't agree with.
QUESTION: Goly and her husband have a small, family owned printing business. She has built a commercial building that is worth over $800,000, but it has a $450,000 loan on it. They have leased to buy some equipment, and thinks she must have all this stuff and its debt to grow and remain competitive. Dave thinks that is bull, and tells Goly why.
ANSWER: That’s bull to say that you had to get those things to be competitive, or you would be out of business. The building might have been a wise real estate investment, but it did not cause your business to make more money. A rented building would have allowed your business to operate just fine.
You’re not crunching your numbers right. You say your sales went up 40% when you moved, and this equipment is all of your business? Come on! You have ways to create printing other than this equipment. This equipment does not account to 90% of your revenue.
In my business, I upgrade equipment out of profit. If we don’t make a profit, we don’t upgrade. If you guys keep this up, you’ll be hundreds of thousands of dollars in debt, and then something will happen. You’ll lose a big client, or the economy will shift on you, and then you’ll be blindsided and lose everything you own. The way you grow in business is slower and steadier, on more solid ground.