- Money in Business is Transferred, Not Created – Revenue comes from transferring money from customers to your business in exchange for products or services, after which expenses are deducted.
- Profitability Over Revenue – A business with lower expenses retains more earnings, making cost control just as important as increasing sales.
- Using a Line of Credit for Efficiency – Replacing high-cost merchant cash advances with a lower-interest line of credit helps reduce expenses and improve cash flow.
Transfer of Money
Whenever I hear of people wanting their business to ‘make’ more money, I often think of the concept of ‘make’. The concept of ‘making money’; I believe needs to be re-thought. Money is not created, it already exists in the economy that every business operates in. When a business ‘makes’ money what actually is happening is that money is not made or created, but ‘transferred’ or ‘earned’. From your business sales of products or services, money is transferred from customers to your business. Then this money is subject to business expenses (the cost the business incurred to earn these funds).
Earnings after Expenses
Would you rather have a business that receives $1 million from sales, but has expenses of $900,000 or have a business that receives $500,000 from sales, but has expenses of $100,000? The old saying, ‘It’s not what you earn, it’s what you keep’ is another concept to consider. One of the expenses that I see continuously from our applicants are unnecessary large debt payments to merchant cash advance funders. This expense seriously eats away any realized margins. With a line of credit, merchant cash advances can be paid off and shouldered by a lower interest rate program. By doing this, your business will have kept more of the earned cash, because of the lower expenses.
Whether your business is currently servicing debt payments or your business is debt free, a line of credit can make your business run smoother and keep more of your business earned cash actually in the business.
