We like to start our teachings with the basics, so let’s get to understand what liabilities are. Liabilities are essentially what you owe other parties. Unlike assets, liabilities take money out of the pocket!
Examples of liabilities are:
- Bank debt
- Mortgage debt
- Money owed to suppliers (accounts payable)
- Wages owed
- Taxes owed
Liabilities are known to decrease a company’s value and equity. But in this blog, we’re going to look at things with a different eye. Debt is a word that many people are afraid of. We’ve also seen some shows and all types of reads specifically teaching people to get out of debt. Although, we don’t believe debt can only be seen as a negative measure. Let’s show you how…
You really need to be strategic about it and make sure your potential gains are high. The general rule of thumb here is to make sure your gains are much more than your debt.
Have you ever heard anyone say “the rich use credit to make money? It’s actually very true. Take the property business for instance: agents may take up a loan to buy property in a good area, either renovate it and sell it, or rent it out. Either way, they get to make good gains. Let’s take a look at some other examples you can implement in your business:
Assets financing – ideal for business owners looking for funding specifically to purchase physical equipment.
If you are looking at expanding your offerings or growing your business by getting better production equipment etc, this could be a good investment for your business.
Commercial real estate loans – best for business owners looking to finance purchasing new or existing commercial property or renovating commercial space
Do a good research about the area you are thinking of locating your business, considering the demographics, activities in the area, and things as such. Also, search about the property value. Should you think of relocating your business, you will at least make a good profit from that
Microloans – ideal for new or established businesses looking for a small amount of capital. For established businesses, this money can be thrown in things like marketing campaigns and ADS. Things like data mining and interpretation can help you make better decisions in these instances, ensuring that you take a calculated risk with the loan.
Five tips to help you manage your debt well;
- Pay the amount due, or more, on time – when it is due.
- Know what admin fees and other charges apply, and when they must be paid.
- Know the interest rate you are charged, as well as if and when it can change.
- Make sure you can afford the repayments if interest rates rise.
- Talk to your creditors if you run into financial difficulty.
The word we’re leaving you with is, debt requires you to be disciplined. If you miss payments or pay later than the agreed time, you might face penalties or other obligations.