Be a Smart Borrower
Hello fellow SMC members! Below are my minutes from one of our recent meetings.
Date: 6/23/2010
Meeting Topic: Debt of a Salesman
The Challenge: Elena's brother is opening a new high tech electronic store and needs to borrow money to be able to sell computers and cell phones.
Business Analysis: After an examination of the data, we found many of the new mobile communication devices have some amazing capabilities but by borrowing money to be able to sell them Elena's brother would have to pay interest. So what is the problem you may ask? If Elena's brother borrows money to buy the computers and cell phones he will have to pay back what he borrowed plus the interest he's charged. So, even though he could sell computers and cell phones, he doesn't know how quickly he could sell them and could end up owing more money than he's making.
Solution: Only borrow as much money as you know you can pay back. The best way to pay off a debt is to never have one!
A business can get into a lot of trouble if it borrows too much money. This is especially true if money is borrowed to help a business grow, new sales don't happen and the business can't pay back the loan. Slowly building inventory with affordable items that will sell quickly will help a business to remain debt free. Borrowing too much money can get people into trouble too. If you borrow money to buy things that you want, and don't earn enough money to pay back the loan you can get into a financial mess.
That concludes my latest minutes.
Radley
Date: 6/23/2010Meeting Topic: Debt of a Salesman
The Challenge: Elena's brother is opening a new high tech electronic store and needs to borrow money to be able to sell computers and cell phones.
Business Analysis: After an examination of the data, we found many of the new mobile communication devices have some amazing capabilities but by borrowing money to be able to sell them Elena's brother would have to pay interest. So what is the problem you may ask? If Elena's brother borrows money to buy the computers and cell phones he will have to pay back what he borrowed plus the interest he's charged. So, even though he could sell computers and cell phones, he doesn't know how quickly he could sell them and could end up owing more money than he's making.
Solution: Only borrow as much money as you know you can pay back. The best way to pay off a debt is to never have one!
A business can get into a lot of trouble if it borrows too much money. This is especially true if money is borrowed to help a business grow, new sales don't happen and the business can't pay back the loan. Slowly building inventory with affordable items that will sell quickly will help a business to remain debt free. Borrowing too much money can get people into trouble too. If you borrow money to buy things that you want, and don't earn enough money to pay back the loan you can get into a financial mess.
That concludes my latest minutes.
Radley
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