Loan is a chain

from the book "NO EXCUSE! in business"

- What about loans - asked John from out of the blue.
- What loans? - I asked back with surprise, because I had no idea how the question of loan is related to our previous conversation.
- Let’s say you have developed a new service or product, you have created a smart campaign, but you do not have enough money to start it in big. Would you take up a loan?

I knew where this conversation would go and since I had good and bad experiences with loans it was still very hard to answer John. I have a very biased opinion about loans, but it is only my point of view and I did not wanted to force it on to John. So I tried to give him the middle, diplomatic way.

- If you are hundred percent sure about your product, if you have created tons of surveys regarding its marketability, if you get back enough feed-backs whereby the prospective clients really need your product and if you trust your strategy without any hesitation, then you can take up a loan.
- There are a lot of “if”s... - laughed John.
- Yes, because loan is a kind of chain on your hands.
- Yes, you have to pay it back.
- Pay it back with an interest and you sign it in a situation where you have no basic funds, not even extra funds for the interest.
- But it will come later.
- Yes, if you have created a savvy strategy with a lot of surveys and analysis supporting it.
- Indeed.

I could not stand not to draw him again something. So I started to draw how I envision the issue of loan.


- Look, here is a scale - I said to John. - The left side is your costs and debt.
- Okay. But do not draw too much there. - John smiled.
- Just a little. - I winked him back. - And the right side is your income.
- Got it.
- We both know that when the scale is equal then we are in the level of survival.
- Yep. - agreed John.
- We also know that when the positive side is heavier in the scale then we have profit.
- Crystal clear. - John agreed with me again.
- So what happens when your left side is the heavier side?
- You need that loan. - John started to laugh.
- Which is a temporary help right?
- Yes, of course but a huge and life saving help. - John tried to agree.
- Or a temporary help with a much higher obligation? - I challenged John’s mind.
- Why? - he asked back. - Loan is a tool for survival.
- Loan is a tool if you have a rock hard strategy for a marketable product. - I started - However loan is a poison if you need it for survival.
- I did no understand it. - said John. - Draw please! - he smiled at me.

I smiled back and I started to draw him again.


- When your company is in debt and you need money it means that you are not able to sell your products or services.
- Obviously. But maybe because of some other factor.
- It does not matter why. If you are not able to sell and you are not able to discover its reasons then you will not be able to find a solution for it. Therefore even if you receive a nice big amount of loan you still have no guarantee that you will be able to sell again, since you have not discovered the source of your non-performance.
- Please let me disagree. Loan supports you to survive difficult times.
- No, it is new incomes and profit that makes you survive difficult times.
- Those as well. - John laughed.
- Yes, but without them you are just digging your grave. You have to sell. Because when you get two bags of money, which at the end is actually three bags with the obligations, then you need to earn much more to pay back all the obligations. If you were not able to earn your costs and debt before the loan, then how could you earn your loan, its interest rate as well as your costs and debt?

I saw that John has no answer to this so I continued my line of thinking.

- A loan can be considered as a solution only in case you understand the way how you can sell. If you are unable to sell then it does not matter how much loan you take up, your performance indicators will go down at the end of the day. However if you can go back to the track by challenging the market and to sell again, then you do not need a loan. The problem is that banks are offering loans on golden plates as easy solutions, but it is far away from being an easy way.
- So no loan, right.
- Depends on... - I smiled back.
- On what?
- Wether you are able to sell or not. You can develop any kind of product if it stays on your stock. What will change? You have to learn to sell them. You have to learn to improve your income and to earn profit no matter what the economic climate is.
- By handling excuses, right?

Paperback:  229 pages
Publisher:   Lulu
ISBN:  978-1-300-52746-6
Language:  English

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