Start. Scale. Exit. Repeat. by Colin C. Campbell

Author:Colin C. Campbell [Campbell, Colin C.]
Language: eng
Format: epub
Tags: General Fiction
Publisher: Forbes Books

On that note, some companies may opt to utilize factoring receivables or even taking out a high-interest loan, but I would say that both of these cash-creating methods should be considered last-case scenarios due to the extreme interest rates you end up dealing with.

I’m speaking from experience here from a company I helped acquire once. Before we acquired them, the company was in dire need of cash, so they got a high-interest loan, which took something to the effect of 20 percent interest, except it was based on percentage of revenue. When they hit a heavy sales period like Black Friday, the effective rate was closer to 50 percent. That company was in desperate straits, but these kind of situations often end up digging a bigger hole because the interest keeps you from generating the funding to move forward.

When the oxygen is running low, you’ll have to make tough decisions—and you’ll have to deal with the ramifications of the choices you make, whether that’s entering one of these desperation deals or taking a second mortgage. Either way, both things can put your future—and your family’s future—at risk.

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