Quote:
Originally Posted by Island-Ho
Good thread. One of the problems I'm hearing about is the inability of small companies to routinely borrow funds to pay salaries etc. This really sounds like a poor way to run a business to me. What happened to the profits from all the past good years? Must have been pulled out/paid to owner so he could buy his lakefront McMansion and GFBL. We need more responsible company management, large and small, not relying on someone elses money(credit) all the time.
There is an independent gas station near me that has gone out of business twice in the last two years. It's now back in operation selling gas at $3.36! (In MASS) on a cash basis only. He either could not get credit for the operation, or chose to bypass the enormous cost of dealing in credit cards all day. Yes, it takes a good deal of money (credit) to get going, but credit should not be necessary for continued responsible operation. Maybe we need to get back on a cash basis for routine stuff and cut up the credit cards!  |
Small companies and large companies maintain cash flow with a LOC (line of credit) because business is cyclical, and yes it is used sometimes to pay salaries. It is not a poor way to run a business. As for the past good years, you often plow the profits back into the business so you can grow. THIS is responsible management! If there is enough profit then what's wrong with a McMansion or a GFBL? Nothing!