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Is it Better to Borrow Money Or Pay Down Debt First?

Is it Better to Borrow Money Or Pay Down Debt First?

Update: 2020-01-20
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Description

There is always an element of risk when it comes to borrowing money. While some small businesses might be able to turn a profit, thanks to the additional investment capital, there are others that will only accrue a crippling amount of debt from these substantial loans. So, how do you decide whether your business is in a position to borrow money or if you are better off staying out of debt? In this episode, Gene Marks and Elizabeth Larkin help small business owners determine their best financing options by assessing their ultimate goals.







Executive Summary

3:35 —Today's Topic: Is It Better to Grow My Business By Borrowing Money or Should I Focus on Paying Off My Debts First?



5:10 —Avoiding debt for fear of the risks involved can often cause small business owners to miss out on opportunities that would enable them to grow.



6:46 —Your overall goals as a small business will ultimately determine which approach you take.



8:27 —If you choose to finance your growth with borrowed money, you should perform a discounted cash flow analysis to find out which aspects of your business are most likely to produce a profitable return.



13:01 —While it is important for small business owners to be aware of the current financial climate, don't let the fear of an impending recession hinder you from taking risks.



15:45 —To ensure the security of their data, Gene advises small business owners to enable the multifactor authentication option on all their software applications.







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Transcript

Elizabeth: Welcome back to the Small Biz Ahead podcast, I'm Elizabeth Larkin from The Hartford and I'm here with Gene Marks from The Marks Group.



Gene: Correct.



Elizabeth: And just because we have a bunch of new listeners this week, I just want to introduce Gene's background a little bit into this.



Gene: Yes. Five-time gold medal winner.



Elizabeth: Decathlon.



Gene: In track and field. That is correct. I'm most proud of that.



Elizabeth: And basketball.



Gene: Yeah, basketball as well. Well I was on the team, so I got a medal for that. But you know.



Elizabeth: Yeah, you're a good teammate though. So, Gene, you own a small business. How many employees do you have?



Gene: We have 11 now.



Elizabeth: You added someone.



Gene: About that.



Elizabeth: That's exciting.



Gene: We have about a dozen contractors that, you know...



Elizabeth: Function.



Gene: Give us lots of hours, I might say. Yeah.



Elizabeth: You consider your contractors kind of part of your team.



Gene: Oh, I absolutely do. Everybody gets email addresses and phone extensions and all that kind of stuff.



Elizabeth: Okay, so your business is a small tech company.



Gene: Correct. So what we do is we install business software. We specialize in CRM, customer relationship management. So it's like we do salesforce.com and Microsoft Dynamics and Zoho, and then we do some of the accounting applications like QuickBooks, Xero, and things like that. We set it up and then we provide all services under the sun related to those applications.


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Is it Better to Borrow Money Or Pay Down Debt First?

Is it Better to Borrow Money Or Pay Down Debt First?

The Hartford