Comments on: NATIONAL SMALL BUSINESS WEEK 4: Appropriate Working Capital for Small Businesses 2

By: National Small Business Week around b5media | money news blog

National Small Business Week around b5media | money news blog — Sun, 27 Apr 2008 00:48:06 +0000

[...] to determine your Working Capital needs for your small [...]

By: ren

ren — Fri, 25 Apr 2008 07:55:41 +0000

I’m glad you like the blog. I can see that you’re talking from experience which to me has always been more relevant than book knowledge. I am thinking of writing on when it would be more appropriate to use equity and when to use debt.

By: Robert

Robert — Fri, 25 Apr 2008 06:59:29 +0000

I’m afraid that other than knowing that tracking my “goes-into’s” and “goes-outta’s” as diligently as possible and a few simple calculations to tell me if a venture is profitable, I’m not exactly a financial whiz so I don’t know how much of an inspired discussion I can participate in. :)

But as far as your question, I may over-simplify things to an extreme, but it has ALWAYS worked for me to utilize on-hand assets for leverage whenever possible to offset the need for increased capital. For example, if my company owns warehouse space that I’m not using, then I may rent out a portion to grab some monthly revenue that will keep me from going as deep into debt.

Debt, in my experience, can be a powerful resource for obtaining capital (and IMO is easier to manage) but as a rule, I tend to try to stay away from it whenever possible. Save the credit limit for a rainy day and all that!

Great blog, btw. I just recently found it and I’ve been enjoying the archives.

By: ren

ren — Fri, 25 Apr 2008 03:07:44 +0000

Thanks for visiting, Robert.

Would providing working capital from equity instead of debt be easier to manage?

What do you think? Would love to have a discussion with you on this.

By: Robert

Robert — Thu, 24 Apr 2008 16:05:13 +0000

A simple, yet effective formula and extremely similar to the one that I utilize not only for assessing necessary capitol, but also for assessing the profitability of small ventures.

People that provide services rather than tangible goods should particularly take note of their expenses. Even though the expenses are more abstract much of the time (i.e. the cost of “time”) they are expenses nonetheless.