Hi Aunty B,
My wife and I own a car rental company.
I want to slowly grow, buying the cars for cash and, by doing this, not taking on debt from financiers and banks. My wife wants to finance the cars going forward.
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We are both at opposite ends in this argument.
Can you help?
Can’t say. Why not? Well here’s why not. I would need to see your business plan. The business plan will look at the following elements: strategic goals, competitors, state of the market (crap at the moment), your marketing plan, capital required, suppliers and risk.
Then you need to run two strategic plans with cash flow: one based around taking in bank finance and one without.
And at the same time you need to acknowledge the complication of the relationship – unfortunately you are husband and wife. So you need to do what I call an emotional audit based around What Ifs.
The bank will insist on personal guarantees. What if you put the house on the line to get the finance and the business didn’t work out and we lost the house?
Could you both live with that? Do you both agree to take that kind of risk? Do you promise not to blame the other?
And what if, worst-case scenario, the business couldn’t pay your salaries?
How would you live? Could you cope with a very small income? You need to do this because most couples are not in business with each other so if the business doesn’t work out there is still money coming in through the salary of the other partner.
And, of course, you also imagine the What If the business takes off? How would you finance the growth? What skills would you need to bring in?
At the end of that process, done properly, the answers are there before you. Yes it’s a pain to do the work up front, but no pain… maybe a lot of pain later.
Your Aunty B