Loan effect: Our Business Should Depends On Generating Revenue to Stay Afloat

Some people did not understand what business really means. Many people think that business is just something you have to invest your capital in without plans, and because many did not get it right, they went bankrupt and applied for a loan to stay afloat.

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When you start a business, there are two things we should keep in mind; The business you want to start is it going to request for a loan, and the payment of the loan will not affect the growth of the business.

Second, ask yourself if I start the business with a small amount of capital, will generating income keep the business afloat and growing.

Honestly, many people don't consider these things before getting a loan for a business, but in the end, the loan will cause the business to fail. Not all businesses need a loan, some businesses need to start with your capital because you never know how successful the business will be and to avoid future problems.

From experience, I met a lady who got a loan because he wanted to start a new business in a new area. Honestly, the first thing that kills the business is the loan payment. She started a business where she was new, where she never has customers or earns the customers' trust. In the process, she uses the necessary income to support the business loan repayment.

It is someone's experience, but we all have to learn from it. Businesses should not depend on loans, businesses depend on income to stay afloat.

Business that overly on debt for finance can easily lead to a decline in income if the large portion revenue of the business was taken up by debt payment it can easily cause the business failure.

Don't get me wrong, I'm never saying that borrowing is bad for starting a business, it can be a useful tool for businesses that need to make large investments to grow. As much as it was a useful tool, it can also be a burden on the business if the business is unable to generate enough revenue to pay for the loan.


Reflection of debt on business


I said it before, not every business needs a loan, some loans result in debt for a business as it can limit a business' ability to grow. And if a company struggles to pay debt with operating income, it can lead to taking on more debt to expand into new markets.

Paying too much on debt in business can lead to cuts in other areas to make ends meet. As a result, the business may struggle to attract new customers or retain existing customers because when a customer cannot find the product they purchased from you, they have no reason to visit you and this leads to a drop in sales.

However, to avoid a decline in sales, one should refrain from relying too much on loans, and when a loan is important in a business, the business should strive to balance debt financing with income generation.

Honestly, any business that manages its debt and generates sustainable income is more likely to thrive in the long run than one that is overly dependent on debt financing.

Keep you business afloat with you income not reliant on loan



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