Strategic Debt: Investing in Opportunity

Uncontrolled growth is as cancerous in a business as it is in a body. Plan the growth, and then grow the plan. Growth is expensive. Aggressive growth requires more than just money. It also requires having the right people doing the right things for the right reasons. Before diving into the loan process, before running the numbers to estimate your needs, look at your business and business opportunities through the following 3 lenses.

Opportunity – Should you? Ask the all-important question “Why?” What do you want to accomplish? How will it add value? Or conversely, what problems will it will solve? Why is it important? If you are pursuing a new opportunity, is this the best opportunity or merely your best current opportunity?

Viability – Can you? Can you qualify for the loan? Will you reach the break-even with the money you can qualify for? Can you pay back the loan? How viable is the model or opportunity? Do you have the people and processes in place to execute the plan?

Risk – Do you want to? Let’s play pretend for a minute. If you were a bank, would you lend you money? Are you willing to put your home or other personal assets on the line? Would you invest your cash the same way you’re asking the bank to invest theirs? If you wouldn’t be willing to risk your own money, then why should you risk someone else’s?

These are your end-game questions. If after you’re done, you can’t answer a resounding YES to all of these questions, the likelihood of success is slim at best. If you answered NO to any of the above questions, do NOT continue. Go back to the drawing board. Trust us, it’s the most useful game of pretend you’ll ever play, because you’ll save yourself a lot of headache – and a lot of debt.

If you answered YES to all of the last three questions, congratulations! Now it’s time to crunch the numbers.