"50 years ago people didn't borrow money, they just didn't, it was a shame to borrow money. . . "

Wednesday 5th October 2005 AD
FUNDING YOUR FUTURE EXPANSION ~ Part 1

My first meeting with Franklin Sanders blew me away. The subjects we covered that afternoon back in the mid '90s, I had understood, lectured on and applied in theory for several years, yet Franklin's fervor, knowledge and conviction started to stir something inside me. "Today" he continued passionately, "not only is everyone in debt, BUT it has become FASHIONABLE, the more in debt you are, the more fashionable you are."

Franklin's point all those years ago remains as true today as it was back then. His example doesn't just apply to individuals, but importantly also to the privately owned and operated companies, often family businesses that make up the backbone of the productive, wealth-generating portion of our economies.

Imagine yourself in your typical small to medium enterprise today; lets consider for a moment a carpentry business. Your core business is new kitchens, where you have developed a good niche with some well-established home renovation companies as clients. You employ eight staff, some of which turn up for work most of the time and can do a reasonable job on their good days.

You have a part-time book keeper, but still find yourself spending two to three nights a week on accounts, particularly closer to tax time. The company runs on an overdraft (with the equity in the family home as collateral). Your accounts payable are up-to-date, despite taking you 90 days to collect on your invoices. You have your taxes more or less 
up-to-date, including the VAT you haven't collected yet, and amazingly, the provisional income tax that you haven't even earned yet. All in all, by today's standards, business is OK.

But there is a bigger problem that awaits our carpentry company just around the corner, the same problem facing almost all companies today. What is this lurking crisis? How were the companies and individuals that Franklin refers to of 50 years ago able to avoid the problem we are now faced with today? Questions we will ponder in tomorrow's Daily Dig.

As Individuals ~ our job is to equip ourselves with the knowledge that will help us survive and prosper in our changing world. At Daily Dig ~ our job is to dig up the relevant information that will provide you, our valued readers, with this knowledge.

Best Regards - Philip Judge pjudge@anglofareast.com