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How to get others to give you the resources you need to start your business?

We all have great ideas but sometimes we struggle with bringing it to the market. The  good news is a lot of great ideas do not require a lot of upfront cash to start. It is possible to exchange your skills for cash. To convince others first you will need to convince yourself.

Start by:

Creating a one page business plan that speaks to you exactly what you want to bring to the market.

Find people who will be willing to exchange your ideas for cash.

Learn basic accounting principles which gives you insight into how your business is performing. You do not have to be an accounting genius but you should at least understand your income statement, statement of cash flows and balance sheet.

Send me a message if you need more information on these statements.

The Cost of Financing Inventory

What does it really cost you to carry your inventory on credit.  Did you know that when a term like 2/10, net/30 is given, and you choose to wait till the end of the term to pay, it costs you as much as a loan that has an APR of 36.5%. In other words, if you are going to finance your inventory you are better off shopping around.

The annual rate is computed as follows:

Annual rate = Discount rate * (365 days / Term of the loan)

Using our example of 2/10, net 30, the number of days financed is 20days because there is a discount available for the first 10days it cannot be included in the financing days.  In other words, you are forgoing a 2% discount to obtain a 20 day loan.  Plugging in the numbers to the formula we get:

Annual rate = 2% * (365/20) = 36.5%

I strongly discourage debt even in business, there are ways you can plan where you don’t have to use debt to carry your inventory but if you must finance your inventory you are better off looking for better terms at a bank.